China
China should complete its transition to a market economy (World Bank)
China should complete its transition to a market economy — through enterprise, land, labor, and financial sector reforms — strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth.
China should complete its transition to a market economy — through enterprise, land, labor, and financial sector reforms — strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth.
These are some of the key findings of a joint research report by a team from the World Bank and the Development Research Center of China’s State Council, which lays out the case for a new development strategy for China to rebalance the role of government and market, private sector and society, to reach the goal of a high income country by 2030.
Shanghai Gesture by Camilla Davidsson
The report, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society”, recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances.
“China’s leaders have recognized that the country’s growth model, which has been so successful for the past 30 years, will need to be changed to accommodate new challenges,” said World Bank Group President Robert B. Zoellick.
“The case for reform is compelling because China has now reached a turning point in its development path. Managing the transition from a middle income to a high-income country will prove challenging; add to this a global environment that will likely remain uncertain and volatile for the foreseeable future and the need for change assumes even greater importance.”
“China has an opportunity to avoid the middle-income trap, promote inclusive growth, without further intruding on the environment, and continue its progress towards becoming a responsible stakeholder in the international economy,” he said.
The report lays out six strategic directions for China’s future: completing the transition to a market economy; accelerating the pace of open innovation; going “green” to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.
“Central to the report’s findings is the need for China to modernize its domestic financial base and move to a public financial system– at all levels of government — that’s transparent and accountable, overseen by fewer but stronger institutions, to help fund a changing economic, environmental, and social agenda,” Zoellick said.
“The reform agenda, with a stronger and more flexible financial sector, the promotion of innovation, and green growth as drivers of development, can lead to opportunities for creating new jobs and additional productivity within China as well as new opportunities for foreign firms.”
There is growing recognition, supported by the findings of the research report, that China’s growth will decline gradually in the years leading to 2030 as China reaches the limits of growth brought about by current technologies in its current economic structure. The report advocates Chinese policymakers should shift from a focus entirely on the quantity of growth to include the quality of growth as well.
The report makes the case for the government to redefine its role — to focus more on systems, rules and laws — to boost efficient production, promote competition, and reduce risks. It recommends redefining the roles of state-owned enterprises and breaking up monopolies in certain industries, diversifying ownership, lowering entry barriers to private firms, and easing access to finance for small and medium enterprises.
Reforms should include commercializing the banking system, gradually removing interest rate controls, deepening the capital market and further developing independent and strong regulatory bodies to support the eventual integration of China’s financial sector within the global financial system. Financial reforms in the next two decades should be decisive, comprehensive and well coordinated, following a properly sequenced roadmap. A priority is to liberalize interest rates according to market principles.
On land reform, priority should be accorded to protect farmers’ rights over agricultural land, expanding land registration and rental rights. To assist with labor reforms, changes in the residency permit system – the hukou – are a priority. While progress on hukou reforms will depend on fiscal reforms that balance revenue raising and spending authorities across different levels of government, it should begin and be completed by 2030.
To accelerate the pace of innovation, the report advocates greater efforts to build countrywide research networks, steps to improve the quality of tertiary education and links with global networks, supported by a stronger rule of law and intellectual property rights enforcement. It says such an open innovation system would be a prerequisite to benefit fully from global innovation links.
For China to advance the “going green” development agenda, it will need to look at long term market incentives to encourage enterprises and households to go green. This should include more public investments, and the better design and enforcement of regulations to complement market incentives, such as taxes, fees, tradable permits and quotas, and eco-labeling. China can establish itself as a global green technology leader by implementing stringent and effective policies to reduce greenhouse gas emissions. Stringent emissions reduction policies, such as carbon trading or carbon taxes, could spur innovation in green technologies.
To reverse rising inequality, the report says China will need to focus on a social protection system appropriate for China in 2030, with a special emphasis on the poor. It lays out the case for “flexicurity”. This can include reforms in pension and unemployment systems so workers have reasonable support in their old age or when jobless. This can ensure comprehensive coverage of pension insurance, especially for rural people and migrant workers in cities. The report also warns that extending the current level of urban services and social protection to rural residents and migrants — well over half the population — will pose a significant fiscal burden and should be implemented prudently.
To fund China’s priorities in the decades ahead, and to deal with external shocks, the report calls for further fiscal system reforms. These should include improving the efficiency of raising revenue and changing fiscal relations between different levels of government as well as strengthening the efficiency of public spending. There is untapped potential for revenues through higher taxes on energy consumption, taking dividends from state-owned enterprises, and levying taxes on personal incomes, motor vehicles, and property.
The report proposes a sequencing of reforms, as well as quick wins and actions to address short term risks. Support for reforms will be stronger if the plans are based on full participation throughout all levels of society. The biggest risk is that vested interests will try to thwart reforms.
As a key stakeholder on the global economy, China can consider how its structural reforms relate to rebalancing changes globally. China should support free trade and back a multilateral agreement on investment. China’s long-term interests lie in global free trade and a stable and efficient international financial and monetary system, relying on multilateral frameworks to help shape the global governance agenda.
China’s growing weight in world trade, the size of its economy and its role as the world’s largest creditor will make the internationalization of China’s renminbi inevitable. Acceptance of the RMB as a major global reserve currency will depend on the pace and success of financial sector reforms and opening of its external capital accounts.
For the full report please visit:www.worldbank.org/china
China
China’s November 2024 Economy: Navigating Mixed Signals and Ongoing Challenges
In November 2024, China’s economy exhibited mixed results: industrial production rose by 5.4%, while retail sales grew only 3%, below forecasts. Fixed asset investment also faltered. Policymakers are anticipated to introduce measures to stimulate domestic demand and combat deflation.
China’s economy showed mixed performance in November 2024, with industrial production and exports showing resilience, while retail sales and fixed asset investment underperformed, amid ongoing challenges in the property sector. Policymakers are expected to implement targeted fiscal and monetary measures to boost domestic demand and address deflationary pressures.
The National Bureau of Statistics (NBS) has released China’s economy data for November 2024, revealing a mixed performance across key indicators. Retail sales grew by 3 percent year-on-year, a significant slowdown from October’s 4.8 percent growth and well below the 4.6 percent forecast. Industrial production, however, showed resilience, rising by 5.4 percent and exceeding expectations of 5.3 percent growth.
The property sector continued to drag on the broader economy, with real estate investment contracting by 10.4 percent for the January-to-November period, further highlighting the challenges in stabilizing the sector. Fixed asset investment also fell short of expectations, growing by 3.3 percent year-to-date, down from 3.4 percent in October.
In November, China’s industrial value added (IVA) grew by 5.4 percent year-on-year (YoY), slightly accelerating from the 5.3 percent recorded in October. This modest improvement reflects continued recovery in key industries, supported by recent stimulus measures aimed at stabilizing the economy.
The manufacturing sector led the growth, expanding by 6.0 percent YoY, while the power, heat, gas, and water production and supply sector grew by 1.6 percent. The mining industry posted a 4.2 percent YoY increase. Notably, advanced industries outpaced overall growth, with equipment manufacturing and high-tech manufacturing rising by 7.6 percent and 7.8 percent YoY, respectively, underscoring the resilience of China’s innovation-driven sectors.
Key product categories showed robust output gains in November:
From January to November, IVA increased by 5.8 percent YoY, maintaining steady growth over the year despite headwinds from a slowing property market and external uncertainties.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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China
Ukraine war: 10% of Chinese people are willing to boycott Russian goods over invasion – new study
Since Russia’s 2022 invasion of Ukraine, some Chinese citizens express dissent through potential boycotts of Russian goods, reflecting a complex relationship despite government support for Russia.
Since Russia invaded Ukraine in 2022, the Chinese government has been criticised for its refusal to condemn the war. In 2024, the economic and diplomatic relationship between the two nations appears stronger than ever.
Because of strict censorship and repression imposed by the Chinese Communist Party (CCP), it is difficult to know the extent to which the general public shares their government’s support of Putin’s regime. But a newly published study I carried out with colleagues found that more than 10% of Chinese people surveyed were willing to boycott Russian goods over the war in Ukraine.
This is a surprisingly large figure, especially since existing surveys indicate that Chinese people hold a broadly positive view of their neighbour. We used a representative sample of 3,029 Chinese citizens for this research, to dig into public attitudes to Russia. The survey was done in 2022 after the Ukraine invasion.
We were aware that due to widespread censorship, our participants might not be willing to give honest answers to questions about Russia’s actions in Ukraine. They might also not feel safe to do that in a regime where disagreement with the CCP’s position is often met with harsh punishment. This is why we asked them to tell us if they would be willing to boycott Russian products currently sold in China.
We felt this question was a good indicator of how much the participants disapproved of Russian foreign policy in Ukraine. More importantly, we were also curious to find out whether Chinese citizens would be willing to take direct political action to punish Russia economically for its aggressive behaviour.
In our study, we split respondents into the three different ideological groups in China: “liberals”, who support the free market and oppose authoritarianism; “the new left”, who sympathise with the policies pursued in China under Mao Zedong; and “neo-authoritarians”, who believe the Russian-Ukrainian conflict is an extension of the rivalry between authoritarian China and the liberal United States. These groups were based on the main political beliefs in China.
We found that liberals were most likely to say they were willing to boycott Russian products. Liberals believe that China should work with, rather than against, western democracies. They also place a high value on human rights and democratic freedoms. Because of their beliefs, they are likely to think that Russia’s actions against Ukraine were unprovoked, aggressive and disproportional.
Chinese and Russian economic and diplomatic relations seem closer than ever in 2024.
American Photo Archive/Alamy
The new left and neo-authoritarians we surveyed were more supportive of Russian products. The new left see Russia as a close ally and believe that Nato’s expansion in eastern Europe was a form of aggression. Neo-authoritarians, on the other hand, believe that supporting Russia, an allied autocracy, is in China’s best interest.
Boycotting Russian goods
Asking Chinese participants if they are willing to boycott Russian products might seem like a simple matter of consumer preferences. However, our study reveals a great deal about the way in which regular citizens can express controversial political beliefs in a repressive authoritarian regime.
Boycotting products of certain companies has long been studied in the west as a form of unconventional political action that helps people express their beliefs. However, in the west, boycotting certain products is simply one of many ways people are able to take political action. In a country such as China, boycotting a Russian product might often be the only safe way to express disagreement with the country’s actions.
This is because citizens do not have to tell others they chose not to buy a product, and their actions are unlikely to attract the attention of the authorities.
Since Russian goods are readily available to Chinese consumers and China is encouraging more Russian exports to reach its market, the Russian economy could be significantly affected by an organised boycott campaign in China. The considerable level of support for a boycott expressed by some of our participants, as well as previous acts of solidarity with Ukraine in China, suggest that such a campaign could already be taking place in the country.
This could harm Russia because it regularly exports a number of different products such as meat, chocolate, tea and wine to China. These goods made up 5.1% of China’s total imports in 2023 – and this figure is likely to increase if Russia becomes more isolated from the west, and therefore more dependent on China for its trade.
While 5.1% of the Chinese market might seem like a low figure, China is home to over 1.4 billion people. In this context, even a small boycott could result in a serious loss to Russian companies.
Our research shows that Chinese citizens don’t always support the official position of the communist party. It also shows that many people there will express even the most unpopular political opinions – if they can find a safe way to do it.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
China
Australia Can Enhance China’s Credibility in the CPTPP
In early 2024, China sought to join the CPTPP, potentially offering modest economic benefits to Australia. Key reforms include limiting state-owned enterprise subsidies, enhancing data flows, and banning forced labor.
China’s Interest in the CPTPP
In early 2024, China expressed a keen interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement involving eleven Pacific Rim economies and the United Kingdom. This move is anticipated to yield modest economic benefits for Australia. However, it also opens the door for vital reforms in areas such as the control of subsidies for state-owned enterprises, allowing free cross-border data flows, and prohibiting forced labor practices.
Economic Implications for Australia
A May 2024 report from the Australian Productivity Commission indicated that China’s accession to the CPTPP might raise Australia’s GDP by only 0.01%. This modest gain isn’t surprising, given Australia’s existing preferential trade arrangement with China through the Regional Comprehensive Economic Partnership. Nonetheless, the CPTPP encompasses more than just tariff reductions, focusing on broader trade principles and standards.
Reform Commitments Required from China
For China to become a CPTPP member, it must demonstrate adherence to high-standard rules initially developed with the country in mind. This commitment will help alleviate concerns among member nations like Japan and Canada, particularly regarding China’s economic practices and geopolitical tensions, such as those with Taiwan. Membership would necessitate reforms, including limiting SOE subsidies, enabling freer data flows, and banning forced labor, with significant penalties for non-compliance.
Source : Australia can encourage China’s credibility in the CPTPP
- China’s November 2024 Economy: Navigating Mixed Signals and Ongoing Challenges
- Ukraine war: 10% of Chinese people are willing to boycott Russian goods over invasion – new study
- Australia Can Enhance China’s Credibility in the CPTPP
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
