The 19th Congress of the CPC – How bright is a future of China?
By: Timofey Bakhvalov, LLM, Business consultant and analyst
Chinese national thoughts, expectations and judgments were always in categories not for a year or for a five-year period, but for decades and centuries. However, the reality is changing so rapidly that new types of plans are needed. Not just short-term and medium-term plans, but really working and effective plans and programs.
Xi Jinping – the country’s leader and the core of the CPC, the largest party in the world with 89 million members. A lot of expectations and what are the most important one? Naturally stability it is. It was all about stability during the first two days of the Congress, attended by more than 2,200 delegates. And it was "stability" that became the key-word of Xi Jinping's keynote speech at the 19th Congress of the CPC Central Committee.
Guizhou is a mountainous multi-ethnic province in southwest China with a population of more than 38 million people. It is a resource-rich region. However the problem of poverty still exists. Xi Jinping decided to make this region exemplary – to show how to get rid of poverty, to demonstrate the real effectiveness of "Socialism with Chinese characteristics".
The 19th National Congress of the Communist Party of China opens at the Great Hall of the People in central Beijing, October 18, 2017. [Photo: Xinhua]
On the first day, Xi Jinping urged the participants of the Congress of the CPC Central Committee to rethink the above-mentioned notion, to move to the creation of a "Modern socialism state". This is what expected from China not only by its citizens, but also by foreign states – by governments and the nations. The future of all mankind depends on China today greatly. Without China, inclusiveness, complementarity and building up of humanity with a common destiny is impossible, as well as the very main dream of China – is the great revival of the Chinese nation.
However, how can we probably talk about independence, if during this year (and look no further, and not worth it, one year is enough), during the first three quarters, China is the record holder for the purchase of US bonds of the state loan, i.e. China acts as the main creditor of the United States.
In August, China increased the volume of purchases of US bonds of the state loan by 34.5 billion US dollars, bringing their total volume to 1 trillion 200 billion 500 million US dollars. The second largest creditor of the United States is Japan, which in August reduced investment in US government securities by 11.4 billion dollars to 1 trillion 101 billion 700 million US dollars. At the end of August, the total volume of American treasury obligations held by the key foreign creditors of the United States totaled 6 trillion 269 billion 700 million US dollars.
Why, talking about "power and new socialism", China is not only developing itself but also other country – the expansive and negative-minded state that imposes morals and values on everyone and everywhere? The same question can be asked, by the way, to Russia. Why and how? US bonds it’s not just billions and digits, but an unrealized, unsettled, unstable future, both for Russia and China.
Regarding China, however, it should be noted that at least it attracts foreign investors. Market of "panda-bonds" got a significant growth, characterized by an increase in the number of issuers and volume of emissions. This is the result of the liberalization of the domestic Chinese bond market. By the end of July this year, the total amount of "panda-bonds" reached 194 billion yuan (29.5 billion US dollars). This figure was stated in the Report on the Internationalization of the Yuan for 2017 of the People's Bank of China.
As well in May a program was approved to link the bond markets of the Chinese mainland and Hong Kong. In July, trading began in the "northern direction", allowing foreign investors to buy bonds issued in the mainland. It is expected that by 2020, the volume of this market will exceed 320 billion yuan. But these are ridiculously minor figures compared with China's investments in the US.
May be it is really a time to stop feeding America? Huge investment, but for what? For some miserable interest? As a matter of fact, investments in the US are very far from investing in promising South Africa or countries in the Asia-Pacific region.
China is not just waiting for, but striving for a real progress and growth, which can change the global economy. However, the real growth, according to Xi Jingping, is not a task for the next five-year plan, but for 15 or more years.
Stability and progress. These two concepts cannot be separated from each other. As the president of China, Xi Jingping said in his opening speech, if the base is shaky, then with the slightest cataclysm, the earth will leave from under the feet. And even the rock will collapse and turn into sand.
The fight against poverty, corruption and the development of the state and building an exemplary standards – this is what expected from China. Both by close neighbors and distant states and nations. And without achieving this, China itself will not go further.
Xi Jinping's statement about building and heading to a "socialism for a new era" sounds wonderful and optimistic. And it is positive to have ambitions in a good way because it is really a pragmatic statement. The government and the CPC really understand that the direction of development must be transformed. Increasing consumer demands, encouragement of entrepreneurship and innovation, rooting out corruption, strengthening of the armed forces, building a state political and cultural power – those are all not just expectations, but goals. Of course, the opinions of other countries are important. But China needs exactly the stability that Xi Jinping is talking about. And first of all it is about raising the standard of living of the nation – as the main tool for economic growth and getting rid of all kinds of dependencies in establishing new ties and developing existing ones and while creating new instruments for social and economic interaction.
Everything that was stated at CPC Congress is just realistic and pragmatic. This program Xi Jinping mentioned in his speech will require at least three five-year plans. But this is nothing, talking about the categories that the China has been living for millennia.