Premier Li's grand plan to transform China's coffers
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Suwatchai Songwanich Chief executive Officer, Bangkok Bank (China)
Chinese Premier Li Keqiang likes to keep a low profile so when he gave two keynote speeches last month and met with journalists to talk about the economy, that grabbed everyone’s attention.
He frankly admitted that his country faces formidable economic challenges and revised down growth expectations to around 7 per cent. Despite targeting a much slower gait than China has experienced over the past few decades, he said that unless China overhauls its economy, it won’t achieve even this modest pace.
China’s reform path includes boosting the service and creative economy, developing leadership in science and technology, accelerating urbanisation, developing clean energy alternatives and reforming the financial industry.
But perhaps, given the sluggish world economy, the most important kick for China’s growth will be finding new markets and this too is part of the plan.
Essentially China is creating new markets by pushing its “One Belt, One Road” initiative to construct new land and sea routes from China to Europe and Africa and establishing new institutions such as development banks to help finance the work and creation of new trade zones, especially in Eurasia.
As mentioned in another column, this parallels the post-war Marshall Plan, which created new markets for America by rebuilding the shattered economies of Europe and Japan.
The influential US-based Foreign Policy magazine described Premier Li’s speech to the People’s Congress as remarkable “for its frank and straightforward portrayal of China’s economic situation”.
According to the author, Daniel Altman, “No politician in the United States is foolish enough to pledge economic growth of 7 per cent per year…yet Li and his boss, Xi Jinping, have essentially bet the future of their government on it”.
Li said the key is for China is to strike a balance between stable growth and structural adjustments.
He said China still has many “tools in its toolbox” that can deployed to rev up the economy and these will be used if it slows down too much.
Fortunately, recent indicators such as the Purchasing Managers Index and exports have been reasonably positive for China, so Li should be able to continue with his grand plan rather than rely on big government spending to kick-start the economy.
I hope that Thailand’s policymakers keep a close eye on China’s reforms, as they encompass many valuable lessons that we could do well to emulate.
