Tag: Deng Xiaoping

Unless the country’s economic management evolved, there was a risk of stagnation, Overholt said, describing the thesis in his new book China’s Crisis of Success. Second, the whole economy finds itself over-leveraged. And as powerful interest groups pushed on policy, so politics was also transformed. To overcome such problems, a country needed both an economic plan and a political plan, Overholt said. The plan would subject state-owned enterprises to market-based reforms, but this “steps on the toes of every power group in China”, he said. The optimistic result: Economic reform is successful and the country then turns to fixing the politics. But interest groups had become stronger, richer and increased the political problem, he said. Economic reform does not happen. Interest groups took control of the government protected themselves against both domestic and foreign competition, leading to a long period of economic stagnation. If they’re not successful with economic reform, they’ll have a bigger political problem”.

A major speech by U.S. Vice President Mike Pence on Oct. 4 was the clearest, highest-level sign that U.S. strategy was turning from engagement to confrontation. Pence accused China of interfering in the midterm elections to undermine President Donald Trump's tough trade policies against Beijing, warned other countries to be wary of Beijing's "debt diplomacy" and denounced China's actions in the South China Sea. Both sides are trading increasingly sharp accusations over human rights and global hegemony, exposing an ideological divide that pits the two on a path of confrontation with no clear resolution in sight. Xi's aggressive foreign policy and authoritarian ways have altered views of China across the board. "What has happened is a sea change in U.S. perceptions of China," said June Teufel Dreyer, an expert on Chinese politics who teaches political science at the University of Miami. Beijing's outrage at Pompeo, meanwhile, was prompted by his recent warnings to Latin American countries about the dangers of accepting Chinese infrastructure loans that are a key aspect of Xi's signature foreign policy project. "It may not be a clash of civilizations, but it is a long-festering conflict of national, political and economic interest and systems that has reached a point of rupture," Kovrig said. While Chinese companies — often backed by easy credit from state banks — have been snapping up foreign assets, Beijing restricts such foreign purchases in key sectors such as energy, transport and telecommunications. "This includes the international trading system, which is dominated by the U.S." Still, attempts to contain China along the lines laid out during the Cold War would be "difficult, if not impossible," given the broad range of contacts across political, economic and personal spheres, Cheng said. Michael Mazza, a foreign policy expert at the conservative American Enterprise Institute think tank in Washington, said "competition will remain the norm" between the two countries unless China is willing to make significant changes in its domestic, economic and foreign policies.

After becoming the leader of the Communist Party of China in 1978, following Mao Zedong’s death two years earlier, Deng launched a program of reform that ultimately saw China become the world’s largest economy in terms of its purchasing power in 2014. Deng recognised that the outcomes produced by the planned economy were poor, with more than 60% of the population living in poverty. That’s why he launched a series of measures such as opening up the economy to foreign trade and investment. The impact of the reforms The outcomes of Deng’s reforms have been without historical peer. Compared with other centrally-planned economies such as the former Soviet Union, this made the task of shifting labour from producing low-productivity agricultural output to higher productivity industrial goods easier. SOEs may account for one-fifth of China’s value-added output and employment. They observed that this compared favourably with international standards, including with the US. The prominent and vibrant role the private sector plays in China today means that its economic growth may be more sustainable than some of its critics imagine. For example, in terms of subjecting Chinese firms to increased competition from overseas firms, China’s trade-weighted average tariff in 2000 stood at 14.7%. Overall, China is less open to foreign investment than high-income countries and many emerging markets as well.

CNN's Fareed Zakaria says that "amid the flurry of news about Hope Hicks and Jared Kushner and this week’s Trump reality show on guns, it would be easy to miss what’s happening in China. But it is huge and consequential.…