The ´New Normal´ it is called, the lower (but still considerable) economic growth China is displaying. High growth is over, says political analyst Victor Shih in the Hellenic Shipping News. Maintaining high growth is just too expensive, he argues.
The Hellenic Shipping News:
“The era of easy growth is over,” said Victor Shih, professor at the University of California-San Diego. “It’s increasingly about difficult choices.”…
With global demand slipping and fewer Chinese entering the workforce, Beijing will need to resort to stimulus spending to get there, analysts said, delaying the reckoning with restructuring.
“It’s very costly and inefficient to reach these growth targets,” Mr. Shih said. “The political leaders want all these good outcomes, growth, some degree of reform and a high degree of stability,” without recognizing the tough trade-offs these entail, he said.
One such trade-off is that between pollution and growth. By letting steel and other heavy industries in northern Hebei province ramp up to meet their year-end production targets last year, the government left the capital bathed in toxic pollution, angering the city’s residents, according to Mr. Shih. If Beijing shutters them, growth will fall, leading to more unemployment, which is another potential source of unrest.
Among the most nettlesome issues is what to do about the state companies that dominate heavy industry and strategic sectors of the economy and wield great political influence.
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