Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Amid Uncertainty, China’s Quest for Bold Development 

Economics / China Economy Mar 09, 2021 - 02:03 PM GMT

By: Dan_Steinbock

Economics

At a historical moment of hope and uncertainty, China pledges bold economic development, despite global tensions.

China’s annual “Two Sessions” meeting has approved national priorities for 2021. Delivered by Premier Li Keqiang, the Government Work Report set a growth target of over 6 percent for Chinese economy for 2021, releasing a numeric goal after it was skipped in 2020, due to the COVID-19 pandemic.

China plans to create more than 11 million new jobs in 2021, while keeping inflation rate (CPI) at 3 percent and cutting the deficit-to-GDP ratio to 3.2 percent. The goal is to increase annual R&D spending by more than 7 percent in the next five years, including foreign-funded R&D centers in China.


Amid the COVID-19 pandemic and the severe global contraction, China’s 2020 real GDP growth climbed to 2.3 percent, making it the only major economy to grow. In 2021, international observers project China’s growth to rise up to 8 percent, due to a low base in 2020 and the ongoing recovery momentum.

In addition to fiscal and monetary policies, government’s focus is increasingly on job creation and consumer prices that have a direct impact on per capita incomes. This is vital in light of the modernization goals of China’s 14th Five-Year Plan (2021-35).

Doubling GDP, per capita incomes by 2035                 

Some two decades ago, Goldman Sachs’s Jim O’Neil coined the idea of BRIC economies, predicting China’s gross domestic product (GDP) would catch up with that of the United States by the early 2040s.

During our conversation in 2009, I projected the inflection point to result a decade earlier, around late 2020s, while O’Neill said Goldman Sachs was also revising its catch-up prediction. Despite the failed global recovery in the 2010s and US tariff wars, these projections remain in schedule and may be accelerating.

As the difference between the US and Chinese growth rates increased from less than 4 to almost 6 percent in 2019-20, rapid recovery brought Chinese economy closer to the US economic output, which it could surpass by the end of the 2020s.

Last November, President Xi Jinping said that “it is entirely possible for China to meet the current high-income countries’ standards by the end of the 14th Five-Year Plan (2021-25) and to double the economic aggregate or per capita income by 2035.” That would require a growth rate of 4.7 to 5 percent in the next 15 years.

It is a bold objective, but - assuming continued reforms - within China's economic potential.

Progress in trade, investment, finance, and technology  

China’s recent trade progress supports the realization of that potential. Despite US tariff wars, China ended 2020 with a record trade surplus with strong exports. Last November, China signed the Regional Comprehensive Economic Partnership (RCEP) pact with 10 ASEAN members, plus Japan, South Korea, Australia and New Zealand.

A month later, the RCEP was followed by the China-EU Comprehensive Agreement on Investment (CAI). Recently, President Xi and French President Macron called for its prompt ratification.

Offsetting external uncertainties, trade pacts support domestic demand, technology self-sufficiency, upgraded supply chains and further opening up in domestic markets.

Moreover, China’s potential is supported by investment and finance. Inbound foreign direct investment in China hit a record high of $144 billion in 2020, thanks in part to the new foreign investment law. Meanwhile, financial integration between China and global economy has intensified significantly.

The big question mark involves external efforts to undermine China's potential, particularly the rise of Chinese multinational concerns in advanced technology.

US China vision needs a reset, not more deterioration              

Recently, Anne O. Krueger, World Bank’s former chief economist, noted that “President Trump’s modus operandi was to bully China on trade, foreign investment, cyberspace, e-commerce, intellectual property, the South China Sea, Taiwan, and other issues.”

Characterizing Trump’s trade war as “a failure that harmed both China and the US,” Krueger called for “resetting US-China trade relations.” That’s been the ardent hope of many progressive Democrats and global-minded Republicans.

Yet, US Secretary of State Antony Blinken’s foreign policy speech, parts of which left Democratic progressives furious, suggests that his China vision builds on former secretary Mike Pompeo’s blunders. It claims to be competitive when it seeks supremacy, collaborative which it precludes, and adversarial when that’s not warranted. A potential technology war is a case in point.

Reportedly, the Biden administration may go ahead with a Trump administration-proposed rule to secure the technology supply chain, by allowing the Commerce Department to prohibit transactions involving “foreign adversaries,” including China.

Former Google top executive Eric Schmidt, who has headed Pentagon technology commissions, has urged Biden and Congress to exploit targeted export controls on high-end semiconductors, “to protect existing technical advantages and slow the advancement of China’s semiconductor industry.”

And since AI requires fifth-generation (5G) platforms that Chinese technology giants have pioneered in commercial markets, the objective is to undermine those giants, including China’s nascent semiconductor industry.

National security serves as a ruse to offset the competitive erosion of US technology giants relative to new European, Korean, Chinese and other rivals.

Peaceful development or geopolitical tensions               

By promoting new rearmament drives, geopolitical friction and forever wars, such priorities would further deepen America’s severe income polarization. As the bipartisan Congressional Budget Office has just warned, US debt as a percentage of its GDP will soar in a matter of years.

Most importantly, such misguided agendas would derail the dreams of industrialization and modernization in many emerging and developing economies that cooperate with China and greatly benefit from its peaceful development.

Instead of more harm to global economic prospects, what is needed is multilateral cooperation between and among both advanced and developing major economies, across all political differences.

Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/  

© 2020 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.

Dan Steinbock Archive

© 2005-2019 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

6 Critical Money Making Rules