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1405-Cp.Record-Econ record month 2014 economy may 2014 1 economy learn more: access context may 2014 may position this month's themes 李克强 ‘Pre-emptive fine-tuning’: Li Keqiang thus described macroeconomic growth model 增长模式 plans to stall the slowdown during a visit to Inner Mongolia —recalibrating macroeconomic controls at the end of the month. The message to provincial and local governments was clear: a 2009-style stimulus is still off cautiously stimulating investment 3 the table. But the Third Plenum reform agenda—‘letting the 城镇化 market play a decisive roll in allocating resources’—has yet to urbanisation —agglomeration could deepen divide channel resources to the right places for private investment to have any staying power as a driver of growth. The invisible integrating Beijing-Tianjin-Hebei 5 hand is not taking over as planned. banking 银行业 Nor will it until SOE reform produces tangible results: —integrating innovative and traditional finance removing inefficient monopolies, cutting back industrial regulating internet finance 7 overcapacity and allowing more dynamic entities into the market. Several more joint-ownership pilots were announced fiscal policy 财政政策 in may by central SOEs, notably China Telecom. But until —deepening tax reform quotas limiting private sector partnership are lifted, expanding Giving MSEs green light to go 9 this roster remains lip service. Even as the need for definitive action becomes more urgent, state-owned enterprises 国有企业 sceptics question what sort of corporate governance model —waiting for systemic guidelines can rectify the disparate interest implicit in joint-public and mixed ownership – conflicting governance incentives 11 private management and assure transparency. ‘Authoritative third parties are needed,’ Zhou Qiren 周其仁 asserts. credit 信用 —housing market reaching turning point deflating the overcapacity bubble 13 cover photo: Getty Images 2 economy 增长模式 macroeconomic growth model learn more: access context may 2014 cautiously stimulating investment Steady rebalancing and sustainable growth still require investment—the coupled with micro stimulus could encourage private investment and question is on what scale and by whom. Industrial-upgrading enthusiasts reduce financing costs, spurring short-term growth. Long-term investment are wary that further fiscal stimulus will only benefit fading industries, a can boost labour productivity and thus incomes, ultimately increasing do- short-sighted fix for unemployment concerns. Easing monetary policy mestic consumption. China can’t 'step on the brake and the gas' Lin Caiyi: the economy does not need 2014 growth should be investment-driven; any longer stimulus industrial upgrading needs financial support Shanghai Securities News 17 Apr 2014 Caixin Online 15 Apr 2014 Economic Information 17 Apr 2014 China’s economic growth relies mainly on invest- My personal view is, no. Given the overall economic China must continue primarily relying on investment ment, but the latter cannot in the long-term rely on situation, the current downturn in manufacturing sen- as it transforms from an externally-oriented economy the government. State investment projects... only timent indicators [merely] reflects capacity reduction to one driven by domestic demand. Investment in the temporarily delay the downturn...The economy will in traditional industries; given structural adjustment, short-term increases demand and employment… have a smooth ride if the state takes its foot off the a weakening in manufacturing does not equate to and… in the long-term raises labour productivity, in- monetary brake and the state investment gas. overall macroeconomic weakness. creasing future income... GAO Liankui 高连奎 LIN Caiyi 林采宜 Justin LIN Yifu 林毅夫 Renmin University of China Guotai Junan Securities PKU National School of Chongyang Institute for Development Financial Studies Innovative economist Gao’s idea ‘society with low living Chief Economist Lin researches institutional economics, Former World Bank chief economist Lin remains optimistic costs’ supports granting government more management anti-monopoly regulation, and macro economic policy. Lin about China’s economy. Lin’s new structural economics power to reduce subsistence costs. His 2014 book The drafted China’s blueprint for bank card development. She favours investment-driven and government-led growth. Lin internal and external situation of China criticises liberal is an adjunct professor at Fudan University and a member co-founded the CCER in 1994 with Yi Gang 易纲, Hai Wen scholars like Zhang Weiying 张维迎 as being ‘populist’. of independent policy think tank China Finance 40 Forum. 海闻 and Zhang Weiying 张维迎. RUC Chongyang Institute for Financial Studies Guotai Junan Securities PKU National School of Development (NSD) Jointly established by RUC and Chongyang Investment Among China’s largest securities companies with C¥6.1 Founded on the basis of CCER, NSD is best known for Ltd., it leads the Chinese think tanks by employing noted billion, Guotai Junan’s IPO is due in 2014 after a five-year China Economic Quarterly, its International MBA foreign researchers and policy advisers. effort. (BiMBA) program, and annual NBER-CCER Conference. 3 economy 增长模式 macroeconomic growth model learn more: access context may 2014 mid-term outlook: recalibrating macroeconomic controls ‘Consumption-driven growth’ remains a buzzword, fuelling discussion bank reserve ratios with an eye to helping agribusiness and MSEs. New of what should now be considered economic vital signs as the state investment projects will likely focus on areas like education, medicine and nominally steps back from the market. Official pronouncements against the environment. Exports are also expected to increase after Li Keqiang’s macro stimulus might be sidestepped by selectively lowering commercial 李克强 visit to Africa this month. may june july august september october november december january february march april may may 12 sep 2013 november 15 nov 2013 18 dec 2013 2 may 2013 Private investment will best 4 nov 2013 Slower growth a must to Lower entry barriers in ser- facilitate transition to con- curb overcapacity, claims CASS vice sector and high-end man- Endogenous growth re- Hukou reform, urbanisation, sumption-led growth says Chi Yu Yongding 余永定 ufacturing before other reforms, quires enabling micro-entities increasing competitiveness, Fulin 迟福林 China Institute for suggests Renmin University Tao to supply goods and services, and innovation will catapult the Reform and Development 29 nov 2013 Ran 陶然 says Zhang Monan 张茉楠 economy past the Lewis turning october point, says Cai Fang 蔡昉 CASS The Third Plenum's reform january june blueprint may negatively impact 8 oct 2013 4 nov 2013 short-term economic growth, 21 jan 2014 29 jun 2013 predicts Renmin University's Liu DRC’s 383 plan calls for People’s Daily 人民日报 2013's 7.7 percent GDP growth Yuanchun 刘元春 Blind inflation of credit and government to stop making denounces local government’s signals turning point in devel- zeal for growth caused recent decisions better made by ‘GDP obsession’, championing december opment speed, says Charhar financial panic, argues Tsinghua markets—and rely instead on ‘green development’ and eco- Institute's Zhang Jingwei 张敬伟 University Li Daokui 李稻葵 macroeconomic monetary and nomic transition 18 dec 2013 fiscal controls february september 13 nov 2013 Central Economic Work 16 oct 2013 Conference moves from mac- 5 feb 2014 11 sep 2013 Higher-quality investment roeconomic controls toward Leaders must be brave will keep the economy strong Tertiary overtaking secondary FT Chinese Online Xu Jin 徐 institutional innovation and enough to abandon Plans and gradually rebalance capaci- sector meaningless without la- 瑾 outlines Li Keqiang’s eco- supply-side interventions, ap- and trust the market, argues ty, says former World Bank chief bour productivity improvement, nomic ‘roadmap’: sustainable plauds Mizuho Securities’ Shen reformist Zhang Weiying 张维迎 economist Lin Yifu 林毅夫 沈建光 argues independent scholar Du growth targets, opening through Jianguang 杜建国 Peking University Jianguo FTZs, and market mechanisms we are watching for officials scholars commentators - moving twoard a consumption-driven economy LI Keqiang 李克强 YU Yongding 余永定 DU Jianguo 杜建国 - shifting focus from GDP LIU He 刘鹤 LIN Yifu 林毅夫 ZHANG Jingwei 张敬伟 - stable growth strategies Xi Jinping 习近平 CHI Fulin 迟福林 XU Jin 徐瑾 4 economy 城镇化 urbanisation learn more: access context may 2014 integrating Beijing-Tianjin-Hebei Beijing-Tianjin-Hebei integration has emerged as a method to enhance re- prices, imbalances among different areas and environmental pollution. gional co-operation, upgrade industrial infrastructure and alleviate Beijing’s Economists are doubtful that true urban-rural integration will be achieved, population and resources pressures. As a national-level development fearing employment and tax revenue reductions in the cities and rent seek- strategy, it faces practical problems such as disparate and rising house ing classes appearing in Hebei. Beijing-Tianjin-Hebei integration—the new Beijing-Tianjin-Hebei integration—the new Residents in the Bejing, Tianjin and Hebei area urbanisation strategy? urbanisation strategy? cannot rely on rentier living Southern Metropolis Daily 6 Apr 2014 Southern Metropolis Daily 6 Apr 2014 Sina Blog 11 Apr 2014 Local governments eager for political achievements If the BTH area is integrated, Hebei will not benefit Worries about rising house prices in Gu'an and often pile up and seize resources to become big cit- in the short-term,
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