Yahoo News on 28 August 2020 reported the following:
Is China’s ‘new’ strategy of economic self-reliance just
a rehashing of an old idea? This long-time China watcher thinks so
Frank Tang
South China Morning Post August 28, 2020, 3:55 a.m. PDT
China’s “dual circulation” strategy to steer it through a
changing world is a new cloak over an old idea aimed at rebalancing the
nation’s economy away from exports towards consumption, according to Michael
Pettis, a professor of finance at Peking University and a veteran China
observer.
The plan unveiled by President Xi Jinping in a strategic repositioning of the nation amid rising tensions with the United States, thrusting “internal circulation” to the forefront of China’s economy and shifting it away from the export-led model that has underpinned decades of growth.
“This is not so different from former Premier Wen Jiabao’s speech in 2007 in which he promised China would make every effort to rebalance the domestic economy towards consumption,” Pettis told the South China Morning Post in an interview earlier this week. “The trade war [with the US] and Covid-19 just make it more urgent.”
The new strategy has stirred concern China will become more
inward-looking as it seeks to offset growing external hostilities, though Xi
has said that China will keep opening its economy to international businesses.
When they talk about internal circulation, they actually mean they need more domestic consumption, and very different types and more productive domestic investment
Michael Pettis
Beijing’s quest to build a vibrant domestic market can be dated back to the late 1990s, when then-Premier Zhu Rongji decided to “expand domestic demand” after the Asian Financial Crisis took a toll on Chinese overseas shipments.
The idea gained currency again after the global financial crisis in 2008, when Beijing rolled out a massive stimulus package to bolster growth.
The “dual circulation” strategy is being implemented at a time when global trade is shrinking after the coronavirus outbreak. China’s major trade partners, notably the United States, are hardening in their attitude towards the nation over issues ranging from trade to the South China Seas, casting shadow over its future position in the global economy.
Pettis, who has witnessed China’s economic and financial changes over the past two decades, is one of a small group of foreign observers who has seen policy changes under presidents Jiang Zemin, Hu Jintao and Xi Jinping.
“When they talk about internal circulation, they actually mean they need more domestic consumption, and very different types and more productive domestic investment,” Pettis said.
His comments are in line with a mainstream view that the global financial crisis forced China to reduce its reliance on exports. China’s answer then was a state-led spending spree on infrastructure, but the economy is running out of steam amid a growing pile of debt and falling productivity.
China is now eyeing consumer spending to put growth on a
sustainable track.
Xi said at a symposium earlier this week that China’s shift to its domestic market has already happened, saying that domestic investment and consumption accounted for virtually of the country’s growth in seven out of 10 past years, with the role of net exports declining.
However, China’s efforts to forge a large enough market at home to sustain its production capabilities could be an uphill battle, Pettis said.
“Finding a substantial amount of productive investment is going to be quite difficult,” he said.
China’s private investment is restricted by exports and has been hit hard by the coronavirus pandemic.
Private investment fell 5.7 per cent in the January-July period, much larger than the overall fixed asset investment decline of 1.6 per cent, data from China’s statistics bureau showed.
Chinese consumption has also been weak, with retail sales falling 9.9 per cent in the first seven months from a year earlier, largely due to consumers’ worries about their jobs and income.
The Peking University professor said the solution to China’s income problems is the same as it was 10 years ago: households should receive a larger share of the fruits of the country’s growth.
“The share taken by ordinary Chinese must go up significantly. But that’s a political problem,” he said.
Translation
北京大學金融學教授，資深中國觀察家邁克爾·佩蒂斯（Michael
Pettis）表示，中國引導其適應在不斷變化的世界的“雙循環”戰略是去應用舊觀念的一種新遮掩布，旨在使中國經濟從出口轉向消費，從而再實現平衡。 。
在與美國之間日益緊張的局勢中, 習近平主席公佈了一計劃對國家進行戰略重新定位，將“內部循環”推向中國經濟的最前線, 並將其支撐數十年經濟增長的出口導向模式作出轉向。
佩蒂斯在本週早些時候接受《南華早報》採訪時說：“這與前總理溫家寶在2007年的講話中沒什麼不同，他在講話中承諾中國將盡一切努力使國內經濟向消費平衡。” “只因（與美國的）貿易戰和Covid-19疫情使之更加緊迫。”
儘管習近平表示，中國將繼續向國際企業開放經濟，但新戰略引起了人們的擔憂，即是中國在尋求抵消日益增長的外部敵意時, 將變得更加內向。
當他們談論內部循環時，實際上意味著他們需要更多的國內消費，非常不同的類型和更多的生產性國內投資。
邁克爾·佩蒂斯
北京尋求建立充滿活力的國內市場的歷史可以追溯到1990年代末，那時亞洲金融危機對中國的海外運輸造成了損失，當時的總理朱镕基決定“擴大國內需求”。
2008年全球金融危機爆發後，這個想法再次流行開來。當時，中國推出了大規模的刺激計劃以提振經濟增長。
在冠狀病毒爆發後全球貿易正在萎縮之際， “雙循環”戰略正在實施。中國的主要貿易夥伴，特別是美國，由貿易到南中國海等問題上對中國的態度都硬了，為其未來在全球經濟中的地位蒙上了陰影。
佩蒂斯是過去二十年來目睹中國經濟和金融變化的見證者，是一小撮外國觀察員之一，他們在江澤民，胡錦濤和習近平主席的領導下已經看到了政策變化。
佩蒂斯說：“當他們談論內部流通時，實際上意味著他們需要更多的國內消費，非常不同的類型和更多的生產性國內投資，”。
他的評論與主流觀點一致，即全球金融危機迫使中國減少對出口的依賴。當時中國的答案是由國家主導進行大量基建消費，但在債務不斷增加和生產力下降的情況下，經濟動力已經耗盡。
中國現正在着眼着消費者支出，以使增長步入可持續發展軌道。
習近平在本週早些時候的一次座談會上說，中國已經轉向國內市場，他說，過去十年中，有七年的國內投資和消費幾乎構成了中國的增長，而淨出口的作用正在下降。
佩蒂斯說，但中國為在國內建立足夠大的市場以維持其生產能力而進行的努力可能是一場艱苦的戰鬥。
他說：“要找到大量的生產性投資將非常困難。”
中國的私人投資受到出口的限制，並受到了冠狀病毒大流行的嚴重打擊。
中國統計局的數據顯示，1月至7月期間，私人投資下降了5.7％，遠高於固定資產投資總額的1.6％的下降幅度。
中國的消費也很疲軟，前七個月的零售額較去年同期下降了9.9％，這主要是由於消費者對工作和收入的擔憂。
北京大學教授說，解決中國收入問題的方法與10年前的解決方案相同：各個家庭應從中國經濟增長成果中獲得更大的份額。
他說:“普通中國人所佔的份額必須大大提高。但這是一個政治問題”。
So, Michael Pettis,
a professor of finance at thPeking University and a veteran China observer has
noted that China is changing its economic policy.
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