Headlines 2017 (1) – Five Economic Policies

Having addressed one of next year’s headlines, these are some rough notes on China’s economic policies, i. e. this years headlines.

china.org.cn, a website operating “under the auspices of the State Council Information Office” and the China International Publishing Group, tells the world (in English) that

[t]he Chinese economy will focus on quality, a shift from the rapid growth the country has been known for over the past decades since the reform and opening up policy was introduced.

Referring to the Central Economic Work Conference’s summary, the article is mostly about parading the new normal personality cult (“Xi’s economic thought takes shape”), suggesting that

China will develop into a manufacturing powerhouse, with a shift from “Made in China” to “Created in China,” the statement said, as the country is striving to evolve from a world factory that churns out low-end products.

A Chinese-language article, published by Xinhua newsagency in Chinese one day earlier (on Wednesday, when the conference closed), is much more detailed, putting the meeting of officials and economists into the context of the CCP’s 19th national congress, and the current 13th Five-Year plan, with recurrent references to the five policies (五大政策).

In the Journal of Nanjing University’s (南京大学学报) third quarterly in summer this year, economics professor Hu Angang (and a doctoral assistant) suggested that the five policies (literally: five big policies) had afforded China the global number-one position as a high-tech industrial country, having overtaken America in 2015. The state’s visible hand had made this possible, Hu argued, adding that given that the market’s “invisible hand” wasn’t as well developed in China as it was in the US, only a sensible combination of both those hands had put China in its new position. Issues such as ways to define the scopes and goals of competition, as well as performance assessments, were also addressed both by Hu’s paper, and by the central economic work conference.

Hu suggests that there were frequent imbalances in classical economic policies, not least America’s (emphasizing innovation sometimes, or emphasizing job creation at others), while China had struck a balance between an industrial policy (产业政策 政策, the policy China started with 30 years ago), a competition policy (竞争政策), an innovation policy (创新政策), a policy of opening up (开放政策), and a “green” environment-protection policy (绿色政策).

One can’t say that the divide between advocates of a set of “balanced” policies are running right through the Pacific (i. e. between Beijing and Washington). America, too, has its share of advocates for balanced industrial policies. An example for an extremely unbalanced concept: the idea that “America should innovate” while China would manufacture was suggested in 2011, by  New York Times columnist Thomas L. Friedman, who said that he owed this division-of-labor concept to former Hong Kong chief executive Tung Chee-hwa. (Besides innovation, Tung also had the “green policy” on his mind. What Friedman had in mind, God knows.)

Either way, Ralph E. Gomory, an applied mathematician, pointed out that Friedman’s and Tung’s math didn’t add up:

[w]e need successful industries and we need to innovate within them to keep them thriving. However, when your trading partner is thinking about GDP rather than profit, and has adopted mercantilist tactics, subsidizing industries, and mispricing its currency, while loaning you the money to buy the underpriced goods, this may simply not be possible.

That was six and a half years ago. And obviously, China’s leadership never intended to leave innovation to America for good.

However, Hu Angang’s paper concedes that so far, while being the world’s “number one high tech manufacturing country” (为世界最大高技术产业国), China’s ability to innovate independently from foreign know-how still remains “relatively low”.

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7 Comments to “Headlines 2017 (1) – Five Economic Policies”

  1. Crikey. Its that time of year again. Happy 2018 JR, and there is no need to give the cats a kick for me this time around.

    Liked by 1 person

  2. And a happy new year to you, too, KT.

    The last time we caught a cat catching a bird was four years ago (it remained unhurt and relaunched from a window sill after some sixty seconds of reflections). In summer, there are at least two couples of barn swallows breeding here, and as long as none of the little ones drops out of the nest, nothing bad happens. And not a single bird has yet been caught at the winter feeding place any year. So, on balance, I think our eco-balance is OK.

    As long as cats are well-fed and under reasonable peoples’ watch, they are even nice to each other.

    Liked by 1 person

  3. Glad to hear ;), may the cats stay peaceful and the rest of the world do the same! Happy 2018 to all!
    Greets, Diander

    Liked by 1 person

  4. Now the woods will never tell
    What sleeps beneath the trees
    Or what’s buried ‘neath a rock
    Or hiding in the leaves
    ‘Cause road kill has it’s seasons
    Just like anything
    It’s possums in the atumn
    And it’s farm cats in the spring
    A murder in the red barn
    A murder in the red barn

    Tom Waites. Murder in the Red Barn.

    Liked by 1 person

  5. Great, but too dark for the first day of the new year. So here’s a song of hope, joy and population growth.

    You never know what happens, when nobody’s at home, or when one of the little ones, does drop from nest to stone, or what the bloody secrets are, that the trees are covering still, and that they’ll whisper into the air (like reed exposed the royal ears, on the day of reckoning.

    There may be murder in the red barn, but the birds that leave in the autumn, keep outnumbering those who moved in,
    earlier the same year …

    Like

  6. Hu Angang’s paper seems a classical example of the sort of self-satisfied analysis of China’s development that Chinese academia produces.

    Like

  7. There are many such examples, but I don’t see Hu Angang’s as one of them. It may be a bit of a clickbaiter, but Hu himself puts the “number-one manufacturer” into perspective. Apart from that, he’s long been an advocate of a substantial state sector – and when it comes to a balanced approach, I think he has a point.

    Like

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