With persistent internal imbalances and Donald Trump roiling the world with trade and conventional wars, China has been set economic objective most humble since their forecasts began in 1991. To stay the course and protect itself against present and future uncertainties, China intends to grow between a 4,5% and a 5% because it understands that the context requires caution and to continue with the formula: more domestic consumption and more investment in technology.
“We have rarely encountered in recent years a such a serious and complex panoramawhere external threats and challenges coincide with domestic difficulties and difficult political decisions,” Premier Li Qiang revealed in the National People’s Assembly or Parliament. The day serves as a State of the Nation debate where the synchronized applause of the 3,000 delegates peppering his speech they replace the noise of Western parliaments. For an hour he detailed the Government’s achievements, issues that could be improved and future actions.
It is customary that the protagonism falls on two figures, that of the growth economic and that of military budget. The first includes for the first time a range (between 4.5% and 5%) that retires the previous formula of “around 5%.” This new soil worries China less than the world. Not so long ago it had growth rates above 10% that underpinned the “Chinese miracle”. They generated a lot of admiration in the West but China warned that this expansion at any price triggered social inequalities and ruined the environment. Every man for himself and let’s get dirty today and we’ll clean up tomorrow, to sum it up. Retired Jiang Zemin, the most ultra-liberal the country has ever seen, percentage points were sacrificed for a more reasonable standard. Scientific growth was called then and high quality development is called now.
Overproduction
This half point gives China room to alleviate entrenched problems with painful recipes. The overproduction of its factories is one: it provokes price war inside that bring you closer to the deflation and one bulk export that strains relations with Brussels and Washington. They are predictable business closures and the increase of paro in the coming months.
He is not encouraged self-consumptionyouth unemployment and the real estate market He has remained on his knees since Evergrande went bankrupt five years ago. He collapse of house prices It is a drama for the millions of Chinese who poured their savings into brick. The horizon advises saving and ignoring the hooks that the Government throws to empty our pockets. They follow the exports as the main economic engine, even though Beijing wants to replace them due to internal demand. Last year, its surplus surpassed the psychological bar of one trillion dollars. It did so in an unprecedented way, with the collapse of trade with the United States, its main partner, due to the effect of trade wars. Southeast Asia, Europe and Africa more than absorbed that void.
Diversification versus protectionism
This market diversification, undertaken when Beijing understood that protectionism was here to stay, is one of the reasons that explain its victory in the last trade war with the United States. The other is the technological self-sufficiencya matter that Li addressed without haste in his speech. Years ago, Beijing encouraged investment in batteries y electric cars as he does now in artificial intelligence, robotics y biomedicine. The objectives are multiple: stimulate the economy with the “new quality productive forces”, avoid the trap of middle-income countries and protect oneself from foreign trade punishments.
China unveiled a military budget increase of 7%. The figure allows opposite readings. On the one hand, it greatly exceeds the economic progress; on the other, they are two tenths less than last years. It is not a minor detail with what is falling in the Middle East and the unapologetic return of Japanese militarism. The Chinese Army does not make headlines for kidnapping leaders or bombing countries but for cyclical purges. Months ago it fell Zhang Youxianumber two of the Central Military Commission, and on the eve of the assembly more than a dozen military deputies have been dismissed.
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