China: Xi’s third term – part one: growth, investment and consumption

Michael Roberts Blog

China’s Congress of the Communist Party takes place this week. This is an important event not only for China, but globally. The Western media have concentrated on the fact that current party leader Xi Jinping will be confirmed for an unprecedented third term as party leader and thus also continue as President of China when the National Congress meets next March.

Naturally, the Western pundits are strongly opposed to Xi having a third term. The FT’s Keynesian guru, Martin Wolf reckoned Xi’s continuation in power would ‘dangerous’ for China and the world. It is dangerous for both. It would be dangerous even if he had proven himself a ruler of matchless competence. But he has not done so. As it is, the risks are those of ossification at home and increasing friction abroad… Ten years is always enough.. It is simply realistic to expect the next 10 years of…

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En odgovor

  1. Odličen članel Michael Roberts-a, vreden pazljivega branja. Zadnji del je še posebej poučen (dovolil sem si označit zanimive trditev v velikih črkah):

    This is the real point. Consumption is rising much faster in China than in the G7 because investment is higher. One follows the other; it is not a zero-sum game. Pettis’ view is a crude Keynesian analysis that ignores even Keynes’ view himself that it is INVESTMENT THAT GROWS AN ECONOMY WITH CONSUMPTION FOLLOWING, NOT VICE VERSA.

    And not all consumption has to be ‘personal’; MORE IMPORTANT IS ‘SOCIAL CONSUMPTION’, THAT IS, PUBLIC SERVICES like health, education, transport, communication and housing; not just motor cars and gadgets. Increased consumption of basic social services is not accounted for in the personal consumption ratios. China has a long way to go in social consumption too, but it is way ahead of its emerging market peers in many social areas and not so far behind leading G7 economies, who started more than 100 years before. I defer to Citibank’s economists in their recent in-depth study of the Chinese economy “In other words, it is quite possible for the Chinese economy to deliver greater opportunities for consumption without consumption being a specific target for policy.” “HOUSEHOLD DISPOSABLE INCOME HAS BEEN GROWING FASTER THAN GDP IN THE REAL TERMS IN THE PAST FEW YEARS (except 2016), a trend likely to extend into the future. At the same time, the UNLOCKING OF WEALTH EFFECTS should help the consumer.”

    The real challenge for China’s economic future is how to avoid much of its investment going into unproductive areas like finance and property that have now led to serious problems.

    Michael Roberts rutinirano “sesuva” zahodno ekonomsko logiko. Logiko, ki temelji na rasti finančnih trgov kot končnem cilju in ne na rasti blaginje ljudi, ki jo definira kot osebno potrošnjo in rast finančnega premoženja. Nič novega, ampak zmeraj znova me preseneča ta neverjetna aroganca Zahod-a, prepričanost, da so edini posedovalci resnice, da je vse kar naredi nekdo drug avtomatično inferiorno, če se ne ujema s pristopom Zahoda. Ob tem popolnoma zanemarijo, da so lahko prioritete, izvedene iz drugaćnega vrednostega sitema, lahko drugačne.

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