Page 158 - 2017 White Paper
P. 158
7 White Paper on the Business Environment in China
a break from the old practices of a planned economy” to prop up economic growth and stimulate the domestic
(Caixin 2015). economy (Mauldin Economics 2016).
As proven by successes such as Alibaba, Xiaomi, Economic policy decisions have political and social
Tencent, Baidu, Lenovo and many more to mention, consequences – the Chinese authorities are highly
China can be a powerhouse of innovation. If the country cognizant of this. This makes it harder to achieve goals.
is to sustain strong growth in the future, it must rely on
fresh waves of entrepreneurialism and innovation. For Reuters has reported that parties within the
this to happen, though, the government must continue government say China should set a 2017 growth target
ahead with difficult reforms to curb the power of the as low as 6 percent in 2017 to in order to continue its
state and improve the rule of law. It must expose state sustained reform campaign aimed at reducing industrial
firms to the discipline of genuine market competition overcapacity and indebtedness. The government has
and the scrutiny of independent antitrust regulators. previously said economic growth of at least 6.5 percent is
needed each year through to 2020 to meet a previously
In a report on China’s economy published in August stated goal of doubling GDP and per capita income by
2015, the IMF noted that the country is making progress 2020 from 2010 levels (Yao 2016).
on structural reforms while it transitions to a“new normal”
of” slower yet safer and more sustainable growth” but The IMF projects that Chinese GDP growth will fall
warned that a huge amount of work in China’s unfinished slowly, from 6.6% in 2016 to 5.8% in 2021. Its forecast
reform remains to be done (IMF Survey 2015). for 2017 is a 6.2 percent, the weakest since 1990, from its
forecast of 6.6 percent for 2016. This assumes that China
Suggestions and 2017 Outlook will implement most of its proposed reforms. Zhang
Liqun, a researcher with the National Development and
We encourage China’s leaders to “keep on keeping on” Reform Commission, however, told Reuters he expected
– until they’ve achieved their goals. the government to maintain the 6.5 to 7 percent goal in
2017.“Policies to stabilize growth will continue next year”,
So, to paraphrase a certain musical, how do you solve he said (Yao 2016).
a problem like China? In continuing to pursue reforms in
2017 and onwards, China right now is walking what could The Chinese government wants to pursue reforms
be a highly treacheous political, economic and social seriously while ensuring stable growth , but it is
tightrope. constrained. This is why, in 2016, President Xi has been
very focused on consolidating his power base. He knows
China must reduce corporate debt, restructure or that China must continue to change – as we all so - and
even liquidate underperforming SOEs and accept lower he knows that Beijing must have not only the will but the
growth. China knows it needs to reform SOEs. President power and the influence to do it.
Xi Jinping’s government had set a target of slashing
1.8 million jobs in the coal and steel sectors. However,
no timeline was set. Beijing at the moment is caught
between encouraging growth to maintain employment
and social stability and accepting less growth. It must
also boost domestic consumption (Mauldin Economics
2016).
ValueWalk has warned that Chinese companies now
increasingly depend on borrowing money to pay back
loans. It cited a Goldman Sachs report as saying that
the debt service ratio for China was around 20%.These
companies are the same SOEs that China says it wants to
restructure and reform.. But China also needs these SOEs
158
a break from the old practices of a planned economy” to prop up economic growth and stimulate the domestic
(Caixin 2015). economy (Mauldin Economics 2016).
As proven by successes such as Alibaba, Xiaomi, Economic policy decisions have political and social
Tencent, Baidu, Lenovo and many more to mention, consequences – the Chinese authorities are highly
China can be a powerhouse of innovation. If the country cognizant of this. This makes it harder to achieve goals.
is to sustain strong growth in the future, it must rely on
fresh waves of entrepreneurialism and innovation. For Reuters has reported that parties within the
this to happen, though, the government must continue government say China should set a 2017 growth target
ahead with difficult reforms to curb the power of the as low as 6 percent in 2017 to in order to continue its
state and improve the rule of law. It must expose state sustained reform campaign aimed at reducing industrial
firms to the discipline of genuine market competition overcapacity and indebtedness. The government has
and the scrutiny of independent antitrust regulators. previously said economic growth of at least 6.5 percent is
needed each year through to 2020 to meet a previously
In a report on China’s economy published in August stated goal of doubling GDP and per capita income by
2015, the IMF noted that the country is making progress 2020 from 2010 levels (Yao 2016).
on structural reforms while it transitions to a“new normal”
of” slower yet safer and more sustainable growth” but The IMF projects that Chinese GDP growth will fall
warned that a huge amount of work in China’s unfinished slowly, from 6.6% in 2016 to 5.8% in 2021. Its forecast
reform remains to be done (IMF Survey 2015). for 2017 is a 6.2 percent, the weakest since 1990, from its
forecast of 6.6 percent for 2016. This assumes that China
Suggestions and 2017 Outlook will implement most of its proposed reforms. Zhang
Liqun, a researcher with the National Development and
We encourage China’s leaders to “keep on keeping on” Reform Commission, however, told Reuters he expected
– until they’ve achieved their goals. the government to maintain the 6.5 to 7 percent goal in
2017.“Policies to stabilize growth will continue next year”,
So, to paraphrase a certain musical, how do you solve he said (Yao 2016).
a problem like China? In continuing to pursue reforms in
2017 and onwards, China right now is walking what could The Chinese government wants to pursue reforms
be a highly treacheous political, economic and social seriously while ensuring stable growth , but it is
tightrope. constrained. This is why, in 2016, President Xi has been
very focused on consolidating his power base. He knows
China must reduce corporate debt, restructure or that China must continue to change – as we all so - and
even liquidate underperforming SOEs and accept lower he knows that Beijing must have not only the will but the
growth. China knows it needs to reform SOEs. President power and the influence to do it.
Xi Jinping’s government had set a target of slashing
1.8 million jobs in the coal and steel sectors. However,
no timeline was set. Beijing at the moment is caught
between encouraging growth to maintain employment
and social stability and accepting less growth. It must
also boost domestic consumption (Mauldin Economics
2016).
ValueWalk has warned that Chinese companies now
increasingly depend on borrowing money to pay back
loans. It cited a Goldman Sachs report as saying that
the debt service ratio for China was around 20%.These
companies are the same SOEs that China says it wants to
restructure and reform.. But China also needs these SOEs
158
