China’s recipe for higher consumption and steady economic growth

Chinese customers buy snacks at a supermarket in Fuyang city, in the eastern Chinese province of Anhui, 16 July 2014. (Photo: AAP)

Authors: Wang Xiaolu, NERI, and Zhou Yixiao, ANU

The slowdown of economic growth in China, since the global financial crisis, is obvious. The average growth rate dropped from above 10 per centto 9.3 per cent between 2008–2011, and then to 7.7 per cent in both 2012 and 2013, according to China’s National Bureau of Statistics. In the first half of 2014, the growth rate was 7.4 per cent. Read more…

Chinese state-owned enterprise investment in Australia

Chinese president Xi Jinping greets Australian prime minister Tony Abbott in Beijing on 11 April 2014. There is intense focus on how the investment chapter of the Australia-China FTA will treat the access of Chinese state-owned enterprises to the Australian investment market. (Photo: AAP).

Author: Peter Drysdale, Editor, East Asia Forum

As the negotiation of the Australia–China Free Trade Agreement (FTA) moves into what is hopefully its final phase, there is intense focus on how the investment chapter of the FTA will treat the access of Chinese state-owned enterprises to the Australian investment market.

Currently all investment proposals by state-owned enterprises (SOEs) are subject to screening by Australia’s Foreign Investment Review Board (FIRB), no matter what their scale or country of origin. Read more…

Chinese SOEs: some are more equal than others

A local resident sits outside the office buildings of SOE Baosteel Group Co., Ltd. in Shanghai, China, 29 May 2014. State-owned enterprises (SOEs) remain ubiquitous in the Chinese economy despite three decades of market reform. (Photo: AAP).

Authors: Paul Hubbard and Patrick Williams, ANU

Last year’s Third Plenum decision was remarkable not only for promoting the ‘decisive role of the market in allocating resources but also for seeing this as being consistent with ‘the dominant position of public ownership’ and ‘the leading role of the state-owned sector’.

State-owned enterprises (SOEs) remain ubiquitous in the Chinese economy despite three decades of market reform, although now they account for only 30 per cent of industrial output. Read more…

Building Silk Roads for the 21st century

View of an elevated highway among mountains at sunrise in Chongqing, China, 19 July 2014. From 1992 to 2011 China spent 8.5 per cent of GDP on infrastructure. (Photo: AAP).

Author: Pradumna B. Rana, RSIS

China’s emergence as the ‘factory of the world’, based on its focus on exporting labour-intensive manufactures, is well-known. Less well-known is the role that infrastructure played in this strategy.

From 1992 to 2011 China spent 8.5 per cent of GDP on infrastructure, much more than the developing country average of 2–4 per cent, according to a 2013 McKinsey Global Institute report. And, from 1992 to 2007, China spent US$120 billion on building 35,000 kilometres of highways. Read more…

China’s slower growth trajectory

A worker cleans the promenade in Lujiazui Financial District, Shanghai on 24 July 2014. Chinese growth accelerated in the second quarter, but long-term growth cannot occur via fiscal stimulus. (Photo: AAP).

Author: Peter Drysdale, Editor, East Asia Forum

 China’s growth outlook is the focus of analysts and economic policymakers all around the world. Nobody can afford now to ignore the scale of the economy and its impact on the global growth outlook. China already accounts for more than 12 per cent of world output in nominal terms and that share continues to grow steadily. Read more…

China’s mini-stimulus package can’t support rapid growth without broader reform

A Chinese migrant worker labours in front of an advertisement at the construction site of a real estate project in Xiangyang city. A slowdown in capital accumulation looks permanent, while the labour force is already shrinking. (Photo: AAP).

Author: Yiping Huang, Peking University

A couple of months ago, the Xinhua News Agency published three articles on ‘stimulus and reform’ to strongly support the government’s mini-stimulus policy. While acknowledging that the term ‘Likonomics’, as Premier Li Keqiang’s economic strategy has been dubbed, demonstrates a commitment to structural reform, the news agency also blamed it for creating the illusion of a tension between stimulus and reform. Read more…

The BRICS are back, with a bank

Chinese President Xi Jinping reviews the guard of honour upon his arrival at Planalto Palace on 17 July 2014 in Brasilia. China has already chosen a site for the future Shanghai headquarters of the BRICS development bank, state media said Thursday just two days after its creation. (Photo: AAP).

Authors: Geethanjali Nataraj and Richa Sekhani, ORF

The BRICS countries met for their sixth annual summit in Brazil this month, setting out to establish a counterweight to Western-dominated global financial institutions.

The summit’s key achievement was the establishment of the long-awaited BRICS New Development Bank. The bank will press for a bigger say in the global financial order — which is centred on the IMF and the World Bank. Read more…

Sino-India border dispute best left dormant

In Ladakh, along the border between China and India, Chinese troops hold a banner that reads: You have crossed the border — please go back, 5 May 2013. (Photo: AAP).

Authors: Santosh Sharma Poudel and Stefanie Kam, RSIS

The border dispute between China and India has come to the fore once again despite an exponential increase in bilateral trade between the two countries. The border dispute highlights the growing strategic competition and lack of trust between them. But it is better left dormant while both governments focus on more immediate issues. Read more…

Oil rig out, but still no happy ending

Lieutenant-Colonel Ngo Minh Tung, captain of a Vietnamese Coast Guard vessel, speaks to reporters aboard the ship on 16 July 2014. On 15 July, the Haiyang Shiyou 981 oil rig was removed from the Vietnamese claimed EEZ in the South China Sea. (Photo: AAP).

Author: Tung Nguyen, Diplomatic Academy of Vietnam

On 15 July, the Haiyang Shiyou 981 oil rig was removed from Vietnam’s claimed EEZ in the South China Sea. But this might not be the happy ending it appears to be. The way the crisis began and ended suggests that similar incidents will occur. The Chinese decision to place the rig in the area was unilateral. So was the decision to pull it out. It was made in the absence of an agreed solution between China and Vietnam and was accompanied by a claim touting the ‘success’ of the drilling operation, which occurred ‘well within China’s sovereignty’, according to China’s Ministry of Foreign Affairs spokesperson Hong Lei. Read more…

What happens in China, doesn’t stay in China

Chinese President Xi Jinping speaks before the Congress in Brasilia, on 16 July 2014. The BRICS group of emerging powers met on Wednesday with South American presidents as they justified the creation of a development bank seen as an alternative to Western-dominated global financial organisations. (Photo: AAP).

Author: Yizhe Daniel Xie, Waseda University

The experience that Chinese leaders gain in domestic politics has a big impact on how they view and handle international issues. Many China watchers and political analysts often overlook these domestic roots of Chinese foreign policy, particularly in China’s push to reform the international financial system. Read more…

Forging a common regional approach to China

Cadet members of the PLA take part in a military training at the Armoured Forces Engineering Academy Base near Beijing on 22 July, 2014. Chinese government authorised foreign media to view the military exercise. (Photo: AAP).

Author: Hitoshi Tanaka, JCIE

Despite China’s rapid and unprecedented economic growth, the world has yet to come to grips with the challenges and opportunities that the country presents. The story of China’s rise is as much about how the rest of the world responds to China as it is about the nation that China is growing to become. Read more…

China’s SOEs test the waters in the South China Sea

A Chinese government ship trails a Vietnamese Coast Guard vessel with reporters aboard in the South China Sea on 15  July 2014. (Photo: AAP).

Authors: Megan Bowman, George Gilligan and Justin O’Brien, UNSW

In early May, the Chinese HYSY-981 oil rig was moved into waters near the disputed Paracel Islands in the South China Sea. The oil rig is owned by the state-owned China National Offshore Oil Corporation (CNOOC) and operated by its subsidiary China Oilfield Services Limited. It was redeployed with Beijing’s approval to drill for another state-owned corporation, China National Petroleum Corporation (CNPC). The rig was deployed 120 nautical miles from Vietnam’s coastline and within Vietnam’s claimed exclusive economic zone. Conflict ensued between Vietnamese and Chinese sea-faring vessels and between citizens of both nations on Vietnamese soil. Read more…

Village democracy shrugs in rural China

A Chinese police officer guards in front of a board to show result of counting votes for the candidates during an election to select village committees at a polling station in Wukan village, Lufeng city. (Photo: AAP).

Author: Bryan Ho, University of Macau

Lauded as one of the most significant political reforms in post-Mao China, village elections in rural China have received considerable attention since the promulgation of the Organic Law of Villagers’ Committees.

The law, first trialled in 1988–1998, is an attempt to allow villagers to elect their own local leaders in China’s lowest-level political unit. Read more…

China’s control over the South China Sea

A Vietnamese protester during a protest rally against China’s deployment of an oil rig in the disputed South China Sea. China recently announced that it would remove the rig. (Photo: AAP).

Author: Peter Drysdale, Editor, East Asia Forum

Last week China announced that it was towing away a giant oil rig from waters disputed with Vietnam, ahead of the onset of the typhoon season and after finding signs of oil and gas, at the same time insisting it stood firm on maritime claims that have sparked disputes with its neighbours — and warned it could return.

China deployed the US$1 billion rig in early May in waters close to the Paracel Islands in the South China Sea Read more…

Murky waters surround the rule of law in the South China Sea

A Chinese coast guard vessel fires water cannon at a Vietnamese vessel off the coast of Vietnam. The rule of law in the contested semi-enclosed seas of Asia needs to be constructed on a foundation that is objective, fair and equitable. (Photo: AAP).

Author: Sourabh Gupta, Samuels International

The air is thick with calls for the rule of law to be observed in the East and South China Seas. ‘Japan for the rule of law, Asia for the rule of law, and the rule of law for all of us’, Shinzo Abe said at the Shangri-La Dialogue earlier this year. Nations, he observed — and by which he meant China — must make claims that are faithful in light of international law and resolve them peacefully. Read more…