China’s economic policy comes to a crucial crossroads at the Chinese Communist Party Congress from October 16, with choices to be made between more pragmatic support for the private sector and more socialist orientations, according to Ma Guonan, senior researcher at The Chinese Economy at the China Analysis Center of the Asia Society Policy Institute.
Interested observers and businesses should carefully consider the leadership choices emerging from congress after what he described as a ‘straitjacket’ over the rally’s economic and political moves, Ma told a conference. by the Asia Society in New York on Monday, “The Future of China: What It Means for Asia and the World”.
Ma, a former senior economist at the Bank for International Settlements, Bankers Trust and elsewhere, did not predict an outcome, but said: “The importance of economic development appears to have fallen significantly short of growing occasions”.
Despite encouraging signs of stabilization lately after a tough first half, “China’s economy is struggling, to say the least,” Ma said. , gained 0.4% over the previous year.
Business has been hit by international shocks such as Russia’s invasion of Ukraine, as well as ongoing trade and technology tensions with Washington, Ma said.
Domestically, however, China has been further stymied by “expensive and very painful” zero Covid policies that have hurt growth, a crackdown on tech platforms and the fallout from tightening trade. policies after years of excessive lending to property developers, Ma said. China’s current housing problems, he noted, differ from those of the United States in 2008 in that those of America stem from lending to single-family home buyers. China’s inability to reserve a shortage of births has also become a long-term drag on its economy, Ma said.
And yet Beijing’s policy responses to date have been limited by a cautious political climate in the country ahead of the party congress, which is expected to lead to a third term in office for Communist Party Secretary Xi Jinping, he said. he declared.
On the one hand, China’s economic performance this year has damaged the credibility of government policy; yet, at the same time, it has become more difficult to come up with alternatives ahead of the big party. Therefore, Ma continued, politics and economics are “in a straitjacket together,” Ma said. “No one dares to make a major move.” Overall, he said, the outlook is “getting trickier and less favorable” for growth.
A favorable scenario for the future would be “less rigid and more pragmatic policy-making” with increased support for the relatively dynamic private sector, he said. Another would be associated more closely with a greater role for the state.
For businesses and other China watchers, the “newly chosen economic team” after the party congress could rock China’s future economic path from here, Ma said.
Other speakers and panelists at the Asia Society event included former US Secretary of State Henry Kissinger, as well as Wu Guoguang, senior fellow at the Stanford Center on China’s Economy and Institutions; Chris Johnson, president of political risk consultancy China Strategies Group; Evan Medeiros, former Senior Asia Advisor to President Barack Obama and current Asian Studies Fellow at Georgetown University; and Rorry Daniels, CEO of the Asia Society Policy Institute.
Other panelists included Dr. Selwyn Vickers, CEO of Memorial Sloan Kettering Cancer Center (MSK); Dr. Bob Li, MSK Medical Ambassador in China and Asia-Pacific; and Kate Logan, associate climate director at the Asia Society Policy Institute. Guests included business leaders Joe Tsai and Ray Dalio.
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