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China’s radical economic reforms could bring new prosperity to hundreds of millions—if Xi Jinping can successfully navigate the bumps ahead.
Addressing China’s local debt problem requires fiscal reforms to increase local revenues. Sustaining growth also requires expanding the role of private firms and a more efficient urbanization process.
The year ahead will be volatile for Asia. Can countries in the region continue to prosper and keep disputes in check while China vigorously reforms and North Korea provokes its neighbors?
All successful development stories, from the United States to Korea, involved the same unbalanced growth trajectory China is now on, and they only rebalanced once they reached high income.
A steep but orderly reduction in GDP growth is likely to be the best evidence that Beijing is forcefully implementing reforms, and that China is preparing itself over the decade to regain growth on a healthier long-term basis.
In countries with financial repression, like China, monetary policy has a muted impact on consumers and a dramatic impact on producers, leading to unsustainable patterns of investment and consumption.
To make the market “decisive,” the state must retreat. China’s leaders have declared war on powerful “vested interests” that oppose reforms, but the biggest vested interest in the Chinese economy is, in fact, the state itself
China wants the benefits of a charm offensive with its neighbors, but it also wants to guard its far-flung territorial claims. It cannot do both.
The third plenum reform proposals will take time to enact but, if rigorously implemented, they will enable China to continue growing at 8 or more percent while also improving the quality of growth.
Public and elite attitudes in the United States and especially China are exerting a growing influence on the bilateral security relationship.