Welcome to the 203rd edition of Trade War.
At the Two Sessions, opening early this week, expect to hear the slogan “new productive forces” mentioned a lot, but what is it and can it work?
Xi’s concentration of power hurts economy and has started to spark pushback. Companies are hiring but aren’t paying much.
Even as Beijing pumps more money into the economy, consumers aren’t spending and banks aren’t lending, fanning fears of a liquidity trap. And China’s economic malaise is revealed in charts showing obstacles to growth.
Along with news of a law to protect private investors, Beijing is trying to placate foreign firms. Biden raises prospect of a ban on Chinese electric vehicles. And China pushes for “alternative trade architecture,” while already exporting more to the developing world than the U.S., EU, and Japan combined.
China’s annual Document #1 focuses on food security; instead is should suggest policies to help under-employed and unemployed rural workers
Chinese academics are experiencing “frustration and lack of hope”
Detention of businesswoman who sued local government in Guizhou over unpaid construction bills, raises national uproar
Two Sessions to tout ‘new productive forces’
China’s annual “Two Sessions” are about to begin, with the Chinese People’s Political Consultative Conference (CPPCC), a government advisory body, starting to meet on Monday March 4, and the National People’s Congress (NPC), on Tuesday March 5.
Expect the usual plans and targets for a raft of social and economic goals, including the key one, GDP growth, to be released when Premier Li Qiang gives his work report on Tuesday (it’s expected to be around 5 percent).
But also be ready for a phrase you may not yet know: “new productive forces.”
“‘New productive forces,’ an emerging catchphrase in China's policymaking, is expected to be a hot topic garnering much attention,” reports Xinhua.
The phrase refers to forces “derived from continuous sci-tech breakthroughs and innovation that drive strategic emerging industries and future industries in a more intelligent information era,” explains China’s official news service.
“New productive forces are crucial to promote self-reliance in high-level science and technology,” says Yuan Yuyu, a NPC deputy and the chairman of medical technology company.
“The emphasis on these forces—the electric-vehicle supply chain, artificial intelligence, renewable energy, advanced infrastructure, cutting-edge semiconductors—has already been apparent. But President Xi Jinping putting a stamp on it at the NPC will send a powerful signal to everyone from bureaucrats to businesspeople,” reports Bloomberg News. “It is a big deal,” says Bill Bishop, publisher of the Sinocism newsletter.
Don’t expect the development of so-called “new productive forces” to be easy, however. First of all, high tech industries are unlikely to be big job providers, with the bulk of employment still in the service sector. And with unemployment still high, that fact matters and could lead local officials to push scarce resources to industries more likely to hire new workers.
And there is the likelihood of pushback from countries around the world. China inevitably will try to ramp up exports of all those goods that fall under the rubric of “new productive forces,” including through the use of supportive policies and subsidies.
“If it doesn’t consume what it produces, all that stuff sloshes on the international markets,” Rhodium’s Daniel Rosen said in a recent presentation at the Harvard Kennedy School.
During “the first three decades of the Chinese growth story, everyone bent over backwards to embrace China entering the international system,” said Rosen, who worked in the Clinton administration as it brought China into the World Trade Organization in the early 2000s.
But today “every major consumer market around the world is currently thinking about putting emergency tariffs to keep [Chinese electric vehicles] out,” Rosen pointed out.
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