Post-Congress China

Abstract

China is on the right track for undertaking the ambitious reforms announced at the 19th Party Congress. Growth strengthened in 2017 amidst fiscal tightening and prudent monetary policy, though the trade war entailed temporary disturbances in late 2018. The shift from quantitative to qualitative growth in the coming “New Era” does not depend on present geopolitical uncertainties in its orientation. The long- term restructuring of the economy investigated in this article, including the project for a new paradigm of globalization by 2050, can be read without worrying too much about the vagaries of current US policy.China is entering a new era because the main contradiction that drives development has changed. The former contradiction was the scarcity of goods and services produced in the economy, which led to poverty and required enforced industrialization to lift people out of it. Since the goal is now moderate prosperity, the main contradiction lies in the imbalances generated by past and present development.Promoting the quality of growth aims first and foremost at reaching the technological frontier through innovation (digital economy, new energies and networks). It aims also at restructuring cities to achieve a harmonized urban/rural development and rethinking mobility. Migrants between the countryside and city should be able to retain their social rights when they move.To fulfill the promise of prosperity in the socialist economy, the core reforms on the demand side involve centralizing social security, unifying retirement regimes and reforming the tax system to reduce the disparities between regions. Public goods must be delivered throughout the country through tax and transfer mechanisms, so that less-favored regions are not forced to resort to excessive indebtedness to provide the common goods and services to which people are entitled.The “New Era” also has a global dimension. Recovering great power status under the full restoration of the Middle Empire for the 100th anniversary of the foundation of the People’s Republic of China is an ambition to be fulfilled through restructuring the world economy, according to the mammoth project “One Belt, One Road” (OBOR). This is intended to set out a new concept of globalization.OBOR opens opportunities to recipient countries that are infrastructure- constrained, where a lack of public goods is hindering their development. OBOR also constitutes a platform to push China’s soft power across Eurasia, strengthening economic linkages through trade, capital flows and construction deals. The OBOR initiative will successfully strengthen Asian integration, since China will become the world’s leading economic power before 2030. This is why the Regional Comprehensive Economic Partnership (RCEP) complements OBOR.