China’s Two contradictions

Dear Friends

China’s Two contradictions –with the USA and within the economy. (worth reading Mao’s work On Contradiction).

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The USA

This is a significant address that was prepared and written at a high level, and delivered in the USA. I would recommend a careful reading as it will reflect the approach to be taken over the next months.

http://en.people.cn/n3/2016/0511/c90000-9056063-2.html

The relationship is being negotiated behind closed doors and public means, including the South China Sea, are used to deploy positions. It will take quite some time before we know if there is an understanding between the USA and China. But, back in 2010 I expressed a belief that 2015-17 would see their relationship come to a head. Both have significant elections and both have to decide their roles in the world.

The Economy

You may also have seen references to an unnamed senior person writing in People’s Daily about economic policy. This was followed two days later by a copy of a speech made by President Xi about supply side reforms.

I think you can take it that these two articles represent the core of official economic policy – stimulus and devaluation are not out but are not the main way to maintain the economy and growth. At times monetary policies will be used to push the economy. It is my view that the leadership do not think stimulus can be shown to get to the right places and growth is adequate at the moment. It is supply side reforms that are the main priority and OBOR.

President Xi’s speech would seem to contain one important point. That Chinese reforms are not going to be like Western reforms. China has seen and studied many countries development models and will go its own way based on their research, and their testing. This is China’s secret weapon – the scientific path as opposed to immediate reactions to problems.

China is heading towards moderate prosperity by 2021 and then fairly shared prosperity by 2049.

Things can change but China seems to want to settle key policies now and not wait till after the new elections for the Standing Committee to be held in Autumn 2017.

Rgds

Stephen



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