China´s leaders are getting material together to prepare their next 5-year plan, that will be finalized at the National People´s Congress in 2016. Political analyst Victor Shih tries to differentiate between the window dressing and the real issues at Bloomberg.
“The five-year plan likely will contain a lot of wording about turning China into a high-tech, innovative economy,” said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance. “However, the central issue facing the economy continues to be whether bloated state enterprises and local government financing vehicles will be allowed to go bankrupt and whether state enterprises will continue to receive preferential treatment from the government and from the banks. Unless these key issues are addressed, China will continue to fall toward a middle-income trap. “
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