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Sun November 10, 2013
China Plots Its Economic Future
Originally published on Sun November 10, 2013 12:54 pm
RACHEL MARTIN, HOST:
Now to China, where after more than three decades of incredible growth, the country is at a crossroads. Chinese leaders are meeting today to plot a new course for the world's second-largest economy. For more we turn to NPR's Shanghai correspondent, Frank Langfitt. Good morning, Frank.
FRANK LANGFITT, BYLINE: Good morning, Rachel.
MARTIN: So, Frank, no other country has enjoyed a boom like China's. Is that economic upturn coming to an end?
LANGFITT: Well, it's slowed down a great deal. Of course, still, China growth rates would be the envy of most other countries. But what's really happening here is everything's changing. You know, the old model that brought them this incredible growth was cheap exports, low labor costs, heavy spending on roads and bridges. It worked really well. And it turned China into middle-income country. But, you know, labor is no longer that cheap here at all. Can't build roads forever. And they want to become a higher income country, and in order to do that, the government figures they need to become a lot more efficient, the economy's got to become a lot friendlier, environment for private businesses, and they've got to build more domestic consumer demand.
MARTIN: So, how do you do that? What changes are Chinese leaders considering in order to make that happen?
LANGFITT: Well, they're looking at a ton of things. But here's just a couple of them. One, is they want continue to urbanize the country, and it's sort of a simple theory. And that is if you bring more farmers into cities, you get them higher-paying jobs in factories and other things, they'll spend more. They'll drive domestic consumption. The other thing is they want to kind of make the economy more dynamic and streamlined, where private business has a freer hand. And the idea is maybe you'll get more innovative economy that will build more global brands and you'll just have more value in the economy.
MARTIN: So, are these changes that the Chinese people will welcome?
LANGFITT: Oh, I think most Chinese would like to see this. And frankly, most foreign countries - the United States - is very supportive of this sort of plan. They want to see a very stable and prosperous China. The problem is there are a lot of people who benefited under current system, in the old system. And to give you one example, these are the people who are probably going to be fighting some of these changes or have been fighting them for some time. For one example, you know, if you were going to make the economy friendlier to private enterprise, that means getting government's hands out of business here. You have a lot of state-owned enterprises, many who have made a mint in what are essentially government-granted monopolies; in telecom, finance, energy, things like that. It's a great racket. They're sitting on mountains of money. And they don't want competition. There's an economist here in Shanghai. His name's Andy Rothman. He works with CLSA. It's a brokerage firm. And he put it like this:
ANDY ROTHMAN: There is a lot of money at stake in everything that happens in China right now. And so any major decisions, for example, shrinking significantly the role of state firms would be putting a lot of people out of work, would be reducing tax bases in a lot of cities. And the local officials there are going to press back against that.
MARTIN: So, Frank, what are we likely to see in real terms come out of the meeting that's happening today?
LANGFITT: Well, that's the big question. Of course, the political process here is very opaque. We've seen a lot of things in the Chinese newspaper, but we're not quite sure what we're going to see. This meeting ends on Tuesday, and we're likely to see anything, like a blueprint, nothing very detailed. It'll probably be sort of a vague report that'll lay out the priorities for the leadership. Now, some economists are concerned that there won't be enough bold economic reform because there are vested interests who are fighting it. And there's not quite the sense of urgency in the sense that, as we were talking earlier, the economy is still growing here at a pretty good pace. On the other hands, other economists are more optimistic. They think, you know, this is a new leadership that's in place and that this is the time to change. And to some degree, this maybe the only chance that they have because they're just beginning a new term.
MARTIN: NPR Shanghai correspondent Frank Langfitt. Thank you so much, Frank.
LANGFITT: Happy to do it, Rachel.
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MARTIN: You're listening to NPR News. Transcript provided by NPR, Copyright NPR.