Difficult Chinese choice ...
If according to the American political system it is not certain for certain who will take the presidency in the White House, then everything is much more transparent with regard to China. The name of the new Chinese leader is already known to all, and this name is Xi Jinping. However, the projected change of power in China does not mean that the new pleiad of Chinese top leaders will fully and completely support the policy that is being conducted under the leadership of the current Chairman of the People's Republic of China, Hu Jintao. At the same time, neither Xi Jinping himself, nor his political comrades-in-arms today are spreading in terms of what criteria Chinese policy will be conducted in the coming years. And if we consider that the current economic situation in China does not look cloudless at all, then the new leadership will first of all have to deal with economic problems.
According to research, it is becoming clear today that the Chinese economy has begun to slow down. If before the crisis, the annual growth rates surpassed 10-11% per year, today, although it remains impressive, it is still declining. Today, growth rates are within 7,7-8,1%. Naturally, such indicators for any other country in the world could seem more than convincing today, but with the level of global integration that the Chinese financial system has achieved today, one can speak about a rather negative trend.
Against the background of news that in the beginning of November the 18th CPC Congress will take place, the stock exchanges reacted in the direction of positive. The official index of purchasing managers in China (manufacturing) in October rose to 50,2, breaking the psychological mark of fifty points. Chinese economist Zhang Litsun said that the observed slowdown in no way can be called a well-established process. According to him, the situation in China today is such that with the right approach to the realization of economic potentials, the growth of the economy next year may again reach the pre-crisis level. But the words of a person representing the Research and Development Center at the State Council of the People's Republic of China are one thing, but objective realities are quite another. And these objective realities today say that the outlined slowdown in the growth rate of the Chinese financial system is connected, first of all, with very cold relations with the United States of America.
After a disastrous visit to China by US Secretary of State Hillary Clinton, bilateral relations have reached a real dead end. Washington began to put pressure on China, declaring that it artificially lowers the rate of the yuan, which puts Chinese goods in terms of competitiveness higher than American goods. And then representatives of the Pentagon stated that they increasingly encounter hacker attacks carried out from the territory of China, and the purpose of these attacks is supposedly to interfere not only in US military-technical projects, but also in economic developments. In other words, the Americans accused the Chinese of cheating and stealing, to which China was forced to respond in a rather harsh way for the mentality of this country. Things reached the point that representatives of the Ministry of Foreign Affairs of the People's Republic of China in response accused the United States of putting pressure on China, which they recognized as absolutely hopeless.
In such a situation, much depends on the new Chinese leadership. To begin with, Xi Jinping and his entourage will have to decide whether China is ready to continue on its previously set course, and therefore, to force the same Washington to erupt with caustic saliva. If the approach to economic development in China is preserved, then one can hardly expect to act out positions on economic growth. But the fact that the United States alone is to blame for the slowdown in the growth of the Chinese economy is not all experts agree with the crisis impulses generated from there. There is an opinion that the very era of the unrestrained Chinese economic boom is coming to its logical conclusion. According to the most pessimistic scenario, the growth of the PRC economy will slow down annually due to the fact that all the financial instruments used today have developed their resources. It turns out that the new Chinese leadership will have to invent either something completely new, or follow the path of other states with powerful economies: the United States or Japan - in other words, start self-crediting, and then move on to the harmful practice of cross-crediting.
In this case, today's China with the same States or Japan can be compared with a big stretch. This is because, for all the scale of the Chinese economy, it remains very weak in terms of the security of Chinese citizens. In terms of per capita annual GDP, China loses to Japan by about 9, and the US - more than 10 times! By the way, by this indicator China loses almost three times to Russia.
Yes, it can be said that the American security is taking shape, including thanks to the colossal borrowings from the banking sector, but this is no longer the most important issue for ordinary citizens. A state can be a hundredfold rich, but at the same time the low level of income of its citizens negates all this apparent economic power.
In this regard, the new generation of Chinese politicians will have to decide on the use of new tools or on the modernization of the usual economic tools, if China does not want to fall back on total lending and refinancing to maintain growth rates. But at the same time Xi Jinping can expect a new test. This test may be associated with a radical liberalization of the Chinese economy and the "release" of the yuan in free floating.
Let's not forget that in the near future the yuan is being grabbed with the status of a gravedigger of the dollar. However, such status can be acquired by the Chinese national currency if the authorities of this country do not keep the rate within artificial borders. But the problem is that as soon as China goes to open trading in the yuan, that exchange rate of this currency will instantly increase by 25-30% (at least, economic analysts say). And this growth will put Chinese goods in tough conditions, giving odds to goods from Europe and the USA. In this case, the new Chinese authorities may become hostages of their own reforms, which today seem to be suggesting themselves. Naturally, in the long run, the PRC can benefit from the liberalization of the yuan, but somehow the people are more accustomed to looking at what is today and will be just as tomorrow. And today - the slowdown in growth and artificial preferences of Chinese products, tomorrow - the potential slowdown in production due to increased competition, which can lead to an increase in unemployment.
The scenario is really pessimistic, and therefore one can hardly expect from Xi Jinping that a new (potential) Chinese leader will follow the liberalization path. Most likely, economic liberalization will be carried out in words to gain time and make the West believe that China plays according to global rules. Chinese politicians are still pragmatists.
It is only in Russia that the 90’s early model of power managed to open a tap carrying the waters of total economic liberalization, as a result of which the richest country’s financial system was completely washed away.
And if the Chinese are pragmatists, then in the near future in the People's Republic of China, obviously, they will look for some alternative moves to return to double-digit growth rates. Will new economic mechanisms be invented here (after all, about Chinese inventions story can tell a lot), and if they share these mechanisms (like gunpowder, compass and paper) with the rest of the world, this same world will know in the era of China's control of Xi Jinping.
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