Translation Category: Economics
Zhang Bei, a senior economist at the People’s Bank of China, warns that risks to China’s financial security are increasing amid an evolving geopolitical environment. Zhang sees sanctions as a double-edged sword, with economic and reputational costs to the sanctioning country—particularly if the sanctioned country is well-integrated with the global economy and financial markets. As a result, Zhang argues that China can reduce the likelihood and impact of potential sanctions by increasing financial openness and integration, diversifying trade and investment relations, and taking a more active role in global economic and monetary governance, including through measured RMB internationalization.
The CCP Politburo holds “study sessions” on a semi-regular basis, in which an outside academic or government expert leads a discussion on a selected topic. Such sessions are important signals as to what issues the senior leadership finds important. The second study session of the 20th Central Committee Politburo was held on January 31, 2023, and was presided over by Xi Jinping. The session focused on themes related to China’s economic development, such as dual circulation, economic security and self-reliance, and rural-urban divides.
Economist Cai Fang argues that problems in China’s labor market will hamper efforts to boost productivity in the years ahead. Cai examines the immediate impacts of COVID-19 and its aftermath on the labor market, concluding that as older workers and those in the informal sector exited the workforce, a “large portion of jobs lost to the epidemic cannot be expected to be regained.” In the long term, China will face deeper economic challenges as the growth in new workers slows. In addition, Cai argues that as growth becomes increasingly “innovation-driven,” there will be a surplus of workers who “do not have the human capital required for newly created jobs.”
Yao Yang, dean of the National School of Development (NSD) at Peking University, identifies three near-term challenges to China’s economic development. The first two—insufficient consumer demand and declining interest in real estate purchases — have both been affected by declining consumer confidence amid the COVID-19 pandemic and ensuing lockdown measures. The third challenge is the risk of recession in key export markets such as the United States and Europe, which may negatively affect Chinese exports. To address these challenges, Yao emphasizes the importance of policies designed to stabilize the real estate market, as well as measures to shore up consumer confidence (which he calls “more precious than gold”), such as direct payments to Chinese citizens. Yao suggests that Beijing should lead by example and implement a more “rational” approach to COVID-19 prevention and control. This speech was delivered to the China Economic Observation (CEO) conference just prior to the November 2022 protests across China opposing the Chinese government’s “dynamic zero-COVID” measures.
Researchers at Nankai University argue that increasing the proportion of China’s population in the middle class will have knock-on effects for social stability, productivity growth, and consumer demand. As a result, they argue, continuing to expand this demographic will be “an important task for China going forward in the new stage of development.” The authors recommend Beijing focus on raising income levels of rural residents through rural revitalization, promoting urbanization, and “gradually transition[ing] from an urban development orientation to a strategic focus that prioritizes rural revitalization and development.”
A prominent scholar at the Chinese Academy of Social Sciences argues that addressing barriers to social mobility is key to curbing rising income inequality in China and avoiding the middle income trap. He promotes hukou reform as a potential remedy, advocating for a change in “the method where the supply of public goods treat[s] people differently based on household registration status.”
In this 1989 interview Xi Jinping gave on economic development during his tenure as Party Secretary of Ningde (in the interview referred to as Mindong), Xi argues that “whether the Party and government organs are kept clear or not is related to the survival of the Party,” the “support of people’s hearts,” and the “fate of the socialist economy.”
Two executives and Party committee leaders at State Grid Corporation of China, the country’s largest state-owned electricity utility company, discuss the interplay between business considerations and national policy goals in international investment decisions.
An unnamed researcher at the National Development and Reform Commission’s Academy of Macroeconomic Research lays out six areas where China must find “key breakthroughs” to become a high-income country. In addition to domestic reforms, the author calls for the creation of an international environment “conducive to crossing over the middle-income stage.”
How can China overcome the middle-income trap? In this 2016 speech, Yao Yang, Dean of the National School of Development of Peking University, identifies what he sees as critical ingredients for avoiding this trap, and argues China should understand these as it aims to become a “high-income country by the centennial of the country’s founding.” He also seeks to dispel what he sees as several widely-held misunderstandings about China’s economic growth challenges.