2018 another year of ‘New Normal’ realization

George N. Tzogopoulos China Plus Published: 2018-01-03 11:16:18
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By George N. Tzogopoulos

Approximately three years ago, the Chinese administration embarked on the attempt of transforming the country’s national economy. Qualitative and sustainable growth became the new long-term objective giving its place to the previous emphasis on the industrial output, construction activities and exports. Known as the ‘New Normal’, the then launched economic model sought to achieve a rebalancing in order to guarantee prosperity for the coming decades. 

The task has been hard because this rebalancing would entail lower growth numbers instead of the double digit rates exhibited by the Chinese economy for many years. Also, the transition period could be provisionally turbulent as the 2015 stock market crisis outlined. No surprise, several Western commentators were employing disastrous scenarios. The term ‘bubble’ was extensively used – especially in relation to the housing market – and concerns for serious consequences at the international level were raised. 

A clerk, right, helps a woman shop for chicken at a supermarket in Beijing, Friday, May 12, 2017.[Photo: AP/Mark Schiefelbein]

A clerk, right, helps a woman shop for chicken at a supermarket in Beijing, Friday, May 12, 2017.[Photo: AP/Mark Schiefelbein]

The beginning of 2018 finds China robust and optimistic while its critics are in the awkward position of having to reconsider their wrong estimations. Numbers provided by the Chinese government show that growth is and will be stable almost reaching 7 percent. Numbers published by the World Bank share the same predictions. There is no grim picture of the Chinese economy any longer and fears have been generally appeased. 

There is a main reason why the ‘New Normal’ is on track. This is the systematic effort of the Chinese government of making the change gradually happen. The decline in growth rates, for instance, is not an unexpected development but goes in line with specific economic goals set every year. As opposed to the 2007-2008 financial crisis, which suddenly created a wave of instability, the situation in China is different being under control. The Chinese government is able to meet its long-term objective, although the road can be sometimes difficult. 

The policy of reforms is a fundamental principle of success. Governmental supervision when required in parallel with the introduction of market elements are creating a sound economic environment. Within this context, the ‘supply-side’ policy is yielding results. The excessive production capacity is being reduced, corporate costs are being reduced and the environment for innovation is being flourishing. China is slowly creating the presuppositions for relying more on domestic consumption and innovative investments instead of exports and its traditional heavy industry. 

The advancement of technology along with the development of research and science are turning China into a country which will not only produce at low cost but will also create in different sectors of the economy. Even here, foundations of progress are solid. In 2015, China’s State Council has unveiled a ten-year national plan, the ‘Made in China 2025’, designed to transform the country from a manufacturing giant into a world manufacturing power.

More openness is obviously helping. China is often criticized in the West for not allowing foreign companies to invest without restrictions. This is also changing in though. A few months ago, the Chinese administration decided to increase access to the service and manufacturing sectors and relax restrictions on foreign ownership. In the words of Prime Minister Li Keqiang, ‘to make it easier for foreigners to set up enterprises, China will test a process whereby Chinese and foreign companies can register at the same window’. 

On the whole, perspectives for 2018 are bright. As President Xi Jinping said during the New Year gathering the efforts in 2018 should be made to comprehensively implement the spirit of the 19th CPC National Congress. The priority will be the strengthening of the healthy and continuous development of the Chinese economy. Reform was one of Xi’s key words. 

Problems do of course exist and the next twelve months will not suffice for them to be eliminated. But what matters more is the determination of the Chinese administration to look for remedies and apply them in practice. This tendency will be certainly reinforced in 2018.

(Dr George N. Tzogopoulos is a senior research fellow and advisor for EU-China relations at the Centre international de formation européenne, Nice/Berlin.)

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Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N Tzogopoulos is Senior Research Fellow at the Centre International de Formation Européenne (CIFE), Advisor on EU-China Relations as well as Lecturer at the European Institute of Nice and the Democritus University of Thrace. He is also Research Fellow at the Hellenic Foundation for European and Foreign Policy and coordinator of its Asian Studies Programme. George is the founder of chinaandgreece.com, an institutional partner of CRI Greek. His first book: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism was published by IB TAURIS and his second one: The Greek Crisis in the Media: Stereotyping in the International Press by Ashgate. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. José Izquierdo Fernández José Izquierdo Fernández is Robin Li Scholar at the Yenching Academy of Peking University. José is a certified Spanish lawyer specialized in corporate law and cross-border M&A. He has extensively researched the phenomenon of Chinese outbound investments, with a particular focus on the cases of Southern Europe and Latin America. José Izquierdo holds a B.A. in Political Science from the University of Granada, Spain, and graduated in Law at the same university in 2016. He has worked and studied at top organizations worldwide, including Turkey, Canada, France, and China. Shafei Moiz Hali Dr. Shafei Moiz Hali studied at George Mason University, Virginia, USA and specialized in the field of International Commerce and Policy. He did his PhD from Huazhong University of Science and Technology, Wuhan, China specializing in Chinese foreign policy focusing on the Belt and Road Initiative and energy issues. Currently Dr. Hali is working as an Assistant Professor with the Faculty of Contemporary Studies, National Defence University (NDU) Islamabad, Pakistan. Bryonie Guthrie Bryonie Guthrie is a former South African diplomat. Now she is an analyst with Acorus Capital, a Hong Kong-based consultancy with expertise in Africa.