Skip to main content

Advertisement

Advertisement

Cause for optimism about China’s economy

I do not share the pessimism over China’s economic outlook, in the commentary (“More economic uncertainty hanging over China”; Jan 3).

Follow TODAY on WhatsApp
Paul Chan Poh Hoi

I do not share the pessimism over China’s economic outlook, in the commentary (“More economic uncertainty hanging over China”; Jan 3).

The crux of the matter is whether China will be able to transition from an economic system that is predicated on sheer export output to a make-up that favours efficiency and long-term sustainability.

While the process of transforming without falling into the “middle-income trap” is fraught with risk, Beijing has made significant strides.

Chinese policymakers, cognisant of structural weaknesses, have made it an objective to reduce heavy industrial overcapacity and eliminate non-productive “zombie” industries.

State-owned enterprises continue to be on the receiving end of reforms aimed at minimising bureaucratic inefficiencies and waste.

Based on comments made at the recent Central Economic Work Conference, one can expect legislation tackling the real estate bubble to follow in due course.

Perhaps the most significant development is how Chinese firms have, in recent years, invested heavily in intellectual property and the acquisition of research and development outfits. This indicates a shift in priorities towards innovation and higher-end manufacturing.

It remains to be seen if and how China’s domestic market can generate sufficient consumption growth, but rising incomes and an increasingly urbanised population provide cause for cautious optimism.

As for factors beyond China’s control, specifically the unpredictability of the incoming Trump administration, the United States is unlikely to risk shooting itself in the foot with a trade lockdown.

The degree of interdependency is too great, and one would expect little to no change beyond grandstanding and posturing.

Lastly, we should not discount the determination of China’s government and people to cement their country’s status as a developed nation and a mature global power.

Psychological drive can be an asset when streamlining an economy.

Read more of the latest in

Advertisement

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.