Chapter 30 China's successes and mistakes

The U.S. and Europe were not alone in missing the economic turning point, nor was China fully able to seize the opportunity. In 2002, China's focus was on domestic regime transition.The leadership group with Jiang Zemin and Zhu Rongji as the core has smoothly transitioned to a new generation of leadership group with Hu Jintao and Wen Jiabao as the core.The Communist Party of China is the ruling party, and it acts very carefully to avoid too much power for individuals to manage the party and the country.In China, the Communist Party controls the political power and leads the Chinese people out of poverty. The Party and the country come first, and individual will must be subordinated to national interests.This can not only explain the inner-party democracy of the Communist Party - the minority obeys the majority, but also explain the term system of the Communist Party leaders.Chairman Jiang Zemin's resignation, this transition is quite smooth and orderly.While the leadership transition in 2002 consumed the time and energy of China's leaders, they did not loose their grip on issues such as macroeconomic policy and China's integration into the world system.

For those who are single-mindedly committed to China's economic development, economics is more important than politics.The Communist Party of China has always been advancing along the road of economic modernization and development of productive forces.You may be a banker, industrialist or entrepreneur, but it doesn't matter what kind of title you have, the important thing is to care about the national economy and people's livelihood.The top management of China's state-owned enterprises has always maintained close contact with the government, because government decisions can have an important impact on state-owned enterprises, such as appointing candidates.Zhu Rongji implemented reforms in areas such as banking and finance that dismantled the old system and accelerated the pace of establishing a new one.

Opponents of China's entry into the World Trade Organization have been questioning the intentions of Washington and the West.China eventually joined the World Trade Organization, which had a huge impact on globalization.There is a growing sense that the U.S. government and U.S. businesses are trying to seek a closer relationship with China because the U.S. wants to curb China’s development while consolidating its hegemony.The U.S. attempt has sparked a flood of public criticism.Wang Hui, a well-known critic at China's Tsinghua University, believes that the time for China's economic growth is shorter than it seems, and the foundation for China's development is not yet solid enough.Blind pandering to the West will hasten the creation of a globalized labor system that benefits large corporations but not ordinary workers.If China does not stop this trend, it will have a detrimental effect on the quest to build a just and equitable society.

After China's accession to the World Trade Organization, the transformation of the economic structure has become faster and faster, but the transformation of ideology will take a longer time. In the 1980s, the Chinese government made a wise decision to adjust its development path. With the continuous development of the global economic system, the data representing the economic situation became unpredictable.Chinese business circles, academic circles, and high-level government officials are eager to see changes in the country. These people conduct detailed analysis and research on domestic and foreign dynamics. In the 1990s, the United States realized that economic globalization had become a reality, and then put aside the adverse consequences of the "9.11" terrorist attacks on the U.S. economy, determined to revive the U.S.-centered world economic system, and began to rebuild shape the country's core competitiveness.

These are just general phenomena that people can see.The United States is the hegemon of the world economy, and its military investment is more than the sum of its 10 competitors (competitors include China). In 2002, the US economic output value was 12 trillion US dollars, accounting for nearly 1/3 of the global total output, and the US economic growth accounted for about 40% of the global economic growth.But in response to terrorist attacks on the United States, the United States has waged a war, and another war is still brewing.After the "9.11" terrorist attack, the United States immediately issued a series of policies, such as the "Patriot Act", requiring those multinational companies that want to operate in the United States to maintain sufficient transparency.After Enron and WorldCom filed for bankruptcy, the United States also enacted laws, especially the Sarbanes-Oxley Act, to impose additional bankruptcy requirements on these companies in response to financial scandals.In short, through various policies and actions, the United States has once again emphasized its hegemony in the world.In this sense, today's world is a world without borders, in which the role of states is diminishing.

Since 2001, the United States has been concerned about China's rapid development.China's status as a producer of low-cost goods deeply disturbed Americans after 2001.Economists on Wall Street have begun to pay attention to the strange phenomenon happening in China.They carefully study these anomalies and try to find out the relationship between China's economic development and the economic pattern of the United States, Europe, Japan and the world, which cannot be foreseen by traditional analysis models. For example, Stephen Roach, chief economist of Morgan Stanley, sent research records to each client in the second half of 2002, emphasizing to them the importance of the Chinese economy to the US and even the global system.Just before the U.S. stock market fell to its lowest level in many years, Roach wrote in the letter: "The current global economic situation is severe, but China is an unrecognized paradise." At that time, the annual growth rate of China's economy was "only" 8.1%, compared to the speed of world economic growth, China's economy can be regarded as quite remarkable (in 2008, when China's economic growth rate "dropped" to 9% in the third quarter, people mistakenly believed that China was about to economic crisis).Roach listed various aspects of China's economic growth, such as promises to reform state-owned enterprises, stimulate domestic consumption and more industrial output.He said: "Now, China's economic development has made remarkable achievements. At the same time, China's success has caused some unexpected results. The whole world has been affected by China's development, and the continuous deflation is an example. "China exports a large amount of low-cost goods to developed countries, which will cause developed countries to face the risk of long-term deflation and greatly affect their economic development.The U.S. economy was just recovering from the stock market crash and the 2001 recession.Roach warned that China's restrictive monetary policy, in which the government directly sets the exchange rate and does not allow the exchange rate to float freely, will have a negative impact on the international market.However, he did not propose some clear coping strategies.

A few months later, Roach called on the American people to stop holding anti-China attitudes.As the US trade deficit grows, more and more Americans are talking about China.Roach refuted this view, pointing out that China is not responsible for the US trade deficit.The reason for the trade deficit is "the pitifully low reserve ratio in the United States... In this case, even if the American people tend to live beyond their means, it is difficult to blame China."He also predicted that the real impact of China's economic development will be manifested in the future. "The main impact of the Chinese economy on the world is to change the macro demand. I expect China to reduce the savings rate by as much as 40%, and hope that the Chinese will increasingly like the consumption patterns of Westerners and the goods produced in Western countries. Although there is no relevant data, But I have begun to notice signs that China has become a consumer society. Now the world needs a stable China more than ever before, but at this time, the world is attacking China, saying that China is disrupting the order of global economic development. Therefore, no matter what you pay No matter what the price is, we must resist actions against China."

Roach called for a long time ago that great attention should be paid to the unexpected results of China's development.However, his wit and foresight are rendered useless by the traditional economic boundaries between China and the United States. At the end of 2003, Roach warned that China's economic development is unbalanced, and China relies too much on government investment to build infrastructure.At the same time, he also issued a warning to China's national banking system at that time.Although Premier Zhu Rongji vigorously reformed the banking system before leaving office, Chinese banks are still under great pressure from bad debts and bad debts.Banks make huge loans to build factories and civil facilities without considering the viability of the projects and people's ability to repay them.Roach warned that this would pose a huge threat to China's continued prosperity.

Many people have such concerns, but they are not well-founded.The U.S. banking system collapsed because subprime lenders couldn't pay their mortgages, while in China the state absorbed a lot of bad and bad debt.Roach sees that China is working hard to break out of this pattern, and he hopes China will start to get back on track.Roach found that China and the United States were more closely connected than people expected, but he did not realize that the banking systems of the two countries were too different to be closely integrated.But soon after, in 2002, fiscal problems became the focus of almost the world's attention.China has integrated into the development track of the world in many ways, but China's financial problems make it a little difficult for China to integrate into the development of the global financial system. If the financial problems are not handled properly, it will be difficult to achieve the expected economic goals.Roach and other economists believe that if China does not deeply understand the importance of fiscal problems, then as China becomes more and more globally connected, more problems will be exposed in China's banking system, all of which are It is predictable by traditional analysis mode.In short, even those savvy ordinary Americans can find that China is just a "short-term exception" and not a sign of subverting the norm.