In our China Economy series, StratNewsGlobal spoke to two scholars Prof B R Deepak of Jawaharlal Nehru University, and Manoj Kewalramani, who heads the China Studies programme at the Takshashila Institution.
Prof Deepak was in China last November and recalled meeting a cross-section of China’s academic community and common people.
“They were not very confident about China’s economy, the kind of confidence they had during the Globalization period was missing. The talk is about rising unemployment, weak consumption, falling real estate prices. Add to that social media criticism or comments about the state of the economy were blocked.”
But it did not still the chatter among the educated, aware classes, with some stating that the China economy GDP growth 2021-23, may have been overstated. Add to that local government debt, estimated at many trillion Yuan.
Manoj Kewalramani pointed out that domestic consumption, which the Communist Party leadership has been trying to kick start as an economic pillar, has not taken off, largely because of government policies. But that’s not how Xi Jinping sees it.
“He sees the economy at an inflection point, where it has a certain direction and that is high end industrial driven growth which will also be export linked,” Kewalramani said. “He also wants to loosen up the traditional barriers between between provinces and cities so he can boost domestic consumption.”
But all this to be achieved from top down, essentially supply driven not market driven because political power requires the maintenance of state control over supply, state control over investment.
Private entities will not be allowed to acquire political salience, so that’s the uneasy balance Xi is trying to achieve while trying to transition the economy from its current model.
There is a tension between the strategic direction which the party envisions for the economy going forward versus the tactical adjustments required to combat unemployment, inflation or deflation, adding to public uncertainties about the future.
Tune in for more in this conversation with Prof B R Deepak and Manoj Kewalramani.
