Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Here’s Why Turkey Can’t Stay Out Of Syria - 25th Sep 17
Hidden Gems Shows A Foreboding Stock Market Future - 25th Sep 17
10 Reason You Should Use Ridesharing To Save Money - 25th Sep 17
Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder - 25th Sep 17
Stock Market Mixed Expectations, Will Stocks Continue Higher? - 25th Sep 17
22 charts and 52 questions that will make you Buy Gold - 25th Sep 17
Speculation Favors Overall Higher Silver Prices - 25th Sep 17
The Advertising Breakthrough Revolutionizing Gaming - 25th Sep 17
Stock Market Forming a Reluctant Top - 25th Sep 17
Grid Forex Strategy - All You Need to Know - 25th Sep 17
Catalonia, Kurdistan, Patriotism, Flags and Referendums - 24th Sep 17
Two Key Indicators Show the S&P 500 Becoming the New ‘Cash’ - 24th Sep 17
The Felling of Sheffield's Big Street Trees 2017 - Dobcroft Road - 24th Sep 17
Advantages of Forex Trading - 24th Sep 17
Stocks, Gold, Dollar, Bitcoin Markets Analysis - 23rd Sep 17
How Will We Be Affected by a Series of Rate Hikes? - 23rd Sep 17
Fed Quantitative Tightening Impact on Stocks and Gold - 22nd Sep 17
Bitcoin & Blockchain: All Hype or Part of a Financial Revolution? - 22nd Sep 17
Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms - 22nd Sep 17
Will North Korea Boost Gold Prices? Part I - 22nd Sep 17
USDJPY Leads the way for a Resurgent Greenback - 22nd Sep 17
Day Trading Guide for Dummies - 22nd Sep 17
Short-Term Uncertainty, As Stocks Fluctuate Along Record Highs - 21st Sep 17
4 Reasons Gold is Starting to Look Attractive as Cryptocurrencies Falter - 21st Sep 17
Should Liners Invest in Shipping Software Solutions and Benefits of Using Packaged Shipping Software - 21st Sep 17
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Accelerating Economic Reform Execution in China

Economics / China Economy Mar 08, 2017 - 11:53 AM GMT

By: Dan_Steinbock

Economics After political consolidation, China is ready to begin a broader implementation of structural reforms. That is vital to double per capita income in 2010-20.

After President Xi assumed office in fall 2012, Chinese leadership has steadily moved toward more comprehensive structural reforms. As evidenced by the recent Two Sessions in Beijing, these reforms are about to move to a new level.


In the coming years, the focus will move toward tougher, broader and deeper execution, which is vital for higher living standards in China.

13th Five-Year Plan policies

Adopted in March 2016, China’s medium-term plan (2016-20) reflects policies, growth priorities and guidelines, which are subject to short-term adjustment but guided by longer-term visions. Most importantly, China is moving from its old, low-cost growth drivers toward new industries fueled by innovation-driven development.

The new 5-year blueprint incorporates many recent technology-related initiatives, including Strategic Emerging Industries (SEI), Sci-Tech Innovation 2030, Internet Plus, and Made in China 2025. It is likely to elevate the role of advanced manufacturing, modern services and strategic emerging industries as a proportion of GDP.

In 2005, when I first lectured at the Chinese Academy of Social Sciences, experts of research and development (R&D) were very concerned about China’s low level of R&D per GDP (1.3%). In 2010, it still relied on imitation (1.6%) but today the figure (2.1%) is already higher than that of the UK, or Italy. By 2020, it will be at par with most advanced economies (2.5%); and close to that of the US (2.7%).

Additionally, the five-year plan features China’s accelerating efforts toward green development, including a tighter carbon intensity target than envisioned in the past Copenhagen pledge. In turn, one of the most sensitive initiatives will focus on the reform of state-owned enterprises (SOE), even at the cost of shutting down the failed “zombie enterprises.”

Furthermore, the plan includes an effort to bridge uneven geographic evolution through regional development, particularly through the Yangtze River Economic Belt, and the new urbanization strategy of large city clusters. Finally, the plan seeks more inclusive growth, including more equitable access to basic public services, and the implementation of the renminbi internationalization.

From strong economy to higher living standards

In the past, the five-year plans focused on accelerating the growth and strengths of the Chinese economy. In 2010-15, the annual GDP growth rate was 7.8 percent; in 2016-20, it will be closer to 6.5 percent. That is very much in line with economic development worldwide. Historically, industrialization accelerates growth, while the transition to post-industrial society means deceleration of growth.

In the pre-Xi China, the focus was still on growth and Chinese economy. Now it is on living standards and Chinese people. The goal is to become a “moderately prosperous society” by 2020. The tough objective requires doubling GDP per capita from the 2010 level, while 55 million Chinese will be lifted from poverty.

Let’s put this goal in its context. In 2010, average living standards – as measured by inflation-adjusted GDP per capita – were about the same in China, Peru and Namibia, based on data by the International Monetary Fund (IMF). By 2020, per capita income will be by 2.3 times higher in China, as per capita income will double to $21,000. As living standards in Peru and Namibia will increase 1.5 times in the same period, they will fall over 25 percent behind China.

Coming after three decades of world-historical growth, China’s catch-up in living standards is world historical and likely to serve as a new model for other aspiring emerging and developing nations. In 2010, Chinese living standards were about 40 percent behind those in Iran, Brazil and Mexico; by 2020 Chinese living standards will catch up with these peers.

During the past decade, there has been much talk about structural reforms in the U.S., Western Europe and Japan. Yet, only China has implemented such reforms. With growth, strategic plans are nice but execution is everything.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

The original, slightly shorter version was published by South China Morning Post on February 28, 2017

© 2017 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife