Western leaders live in a special fairyland where they believe they know what is best for China.
What the West wants from China is not often what China wants for China. The Ministry of Finance’s failure to deliver a ‘bazooka’ rocket last week has left many Western economic commentators sulking because their expectations were not met.
This is the same misinformed group that often believe that a single man, President Xi, determines every policy adopted by China. They live in a special fairyland that is deeply rooted in the old approaches that characterised colonialism. They believe they know what is best for China.
China has a very different perspective on what is needed. Senior leaders acknowledge that progress has been more difficult than anticipated, but they remain committed to the path underpinned by high quality development. That was the key message coming from the Third Plenum.
At a global investment conference in Haikou, I listened to Long Yongtu, the former Vice Minister for Foreign Trade and Economy, expand on this policy headline. He noted that three decades of high growth was unsustainable. The growth target of around 5% was sustainable as China turned towards high quality development. This also reflected a change in the international environment. Until recently globalisation was based on the WTO rule of law, but that has been undermined by the unilateral use of sanctions and tariffs by the United States. He sees the competition now as values based and supply chains are readjusting to this metric.
With poverty eliminated the challenge now is the revitalisation of agriculture and the transformation of traditional industry into high end value added production based on emerging technology. The growth of EV’s is an example. Although they have apparently burst onto the global stage the reality is that this is the result of a decade of research and development work.
China is embarking on a long term journey which has a slow start. The journey involves greater engagement with ASEAN and the Global South. These two markets are seen as replacements for the reduction in opportunities in Europe and the US due to political actions and to the limited opportunities for substantial growth. Europe and the US are mature economies. ASEAN and the Global South still have much room to grow, with expanding middle classes. (This middle class opportunity is the foundation of Australia’s engagement with ASEAN, but it comes as a surprise when China also sees the same opportunity).
The Belt and Road Initiative is an integral component of this change in economic focus. Regulatory changes in China mean that millions of SME’s can now engage in foreign trade. They can make use of the improved cross-border transaction environment made possible by advanced blockchain technology that enables trade settlement without involving the US dominated SWIFT system.
When WTO operations are compromised, the BRI becomes the mechanism for the renewal of globalisation.
These changes were further developed by Huang Qifan, former mayor of Chongqing, who discussed the mobilisation of new productive forces. It was not suitable to follow the old patterns of development. The new productive forces were at play in the environment, new materials, new digital developments, biotech and high end manufacturing.
These policy changes are the ‘bazooka’ impacting on China’s future development. They meet China’s needs and not the expectations of the West, so Western commentators will continue to be disappointed.
Those that sulk miss the opportunities China is offering.