China designs an economic roadmap all the way to 2029
Pepe Escobar: China projeta um roteiro econômico até 2029
HONG KONG – There’s no better place to follow the four-day, twice-a-decade plenary session of the Communist Party of China than dynamic Hong Kong, “one country, two systems”.
Hong Kong is right in the heart of East Asia – halfway between Northeast Asia (Japan, Korea) and Southeast Asia. To the west, it’s not just China, but the vast Eurasian landmass, linking India, Persia, Turkey, and Europe. To the east, navigating forward, it’s the Pacific and the West Coast of the US.
Moreover, Hong Kong is the multipolar and multinodal metropolis, a frenetic global hub, forged by centuries-old commercial routes, attracting people from all latitudes interested in interconnecting commerce, ideas, technologies, transportation, commodities, and markets.
Now, reinvented for Eurasian integration in the 21st century, Hong Kong has everything it needs to thrive as a key node of the Greater Bay Area, the southern hub that propels China to superpower economic status.
The plenary in Beijing was a serious/sobriety-filled affair – trying to find a balance between sustainable economic growth and national security until 2029, when the PRC celebrates its 80th anniversary.
The proverbial elites, the fifth columnists, and declared Sinophobes in the West went crazy with the current deceleration of the Chinese economy – complete with falls in the financial and real estate fronts – occurring parallel to all the hybrid warfare containment emanating from Washington.
Fact: China’s GDP grew around 5% in the first half; and the final communiqué, released at the end of the four-day session, emphasized that this must remain an “unwavering” goal for the second half.
The official rhetoric, of course, was heavy on stimulus to internal consumption and “new impetus” to boost exports and imports.
This fundamental passage in the final communiqué breaks it all down when it comes to the new iteration of the “Chinese socialism with Chinese characteristics”:
We must deliberately give more prominence to reform and deepen reform comprehensively, with a view to promoting Chinese modernization, better coping with the complex developments both at home and abroad, adapting to the new round of scientific and technological revolution and industrial transformation, and meeting the new expectations of our people.
It was emphasized that, to deepen reform comprehensively, we must remain committed to Marxism-Leninism, Mao Zedong’s thought, Deng Xiaoping’s theory, the theory of the three representations, and Xi Jinping’s scientific concept of development, and implement Xi Jinping’s thought on socialism with Chinese characteristics for a new era.
We must study and implement carefully the new ideas, views, and conclusions of General Secretary Xi Jinping on deepening comprehensive reform and apply the new philosophy of development in all aspects.
And to simplify it even further, Xi explained it all with some details.
Those “markets” irritating
Nowhere in the world is there a government focused on drafting five-year plans for economic development (Russia is now involved in its first attempts) – covering rural land development, tax reform, environmental protection, national security, anti-corruption, and cultural development.
When the term “reform” appears no less than 53 times in the final communiqué, this means – unlike Western proselytism – that the CPC is determined to improve governance and increase efficiency. And all these goals must be achieved – or heads will roll.
Science and technology will have a prominent place in China’s development, a kind of continuation of the Made in China 2025 strategy. The emphasis will likely be on better integrating the digital economy into the real economy; updating infrastructure; and increasing the “resilience” of industrial supply chains.
It’s fascinating to observe how the communiqué emphasizes the need to “correct market failures” – a euphemism for reigning in turbo-neoliberalism. What’s emphasized is “unwavering support and guidance” to the non-state sector, with Beijing guaranteeing “all forms of property” in the economy competing fairly and legally “on an equal footing”.
The plenary could be easily interpreted as a calculated exercise in Taoist patience. According to Xie Maosong, of the Chinese Academy of Sciences’ Institute for Innovation and Development Strategy, “Xi has said many times that the easy part of reform is over, and now we’re in uncharted waters. The party must be careful with its steps, particularly as external risks increase. We’re also touching on the interests acquired by many groups.”
Of course, the main obsession of the Hong Kong turbo-capitalists are the “markets”. Conversations with British traders exploring Asia in search of clients reveal they’re not that interested in investing in China – but that doesn’t perturb the planners in Beijing. What matters to the Politburo is how to achieve the economic, social, environmental, and geopolitical goals defined by Xi for the next five years. It’s up to the markets to adapt.
It’s clear that the planners in Beijing are already considering Trump in the general equation. The mantra of the West that China’s economy is struggling to stabilize may be debatable. However, China’s economy may be in a more precarious position now than when Trump launched his trade war in mid-2018. The yuan may be under more pressure due to the gap between US interest rates and China’s.
According to JPMorgan estimates, each 1% increase in tariffs during the 2018-2019 trade war initiated by the US was associated with a 0.7% appreciation of the US dollar against the yuan.
Trump plans to impose a 60% tariff on almost all Chinese products. This would lead to a yuan exchange rate of approximately 9 yuan per dollar, 25% weaker than now.
Now read it all and get to work
It’s enlightening to verify what the chief executive of Hong Kong, John Lee, said about the plenary. He encouraged “all sectors of the community” to read the communiqué. And Hong Kong’s elite business community understood the message: they interpreted it as Beijing betting once again on Hong Kong’s fundamental role in the development of the Greater Bay Area.
It wouldn’t be otherwise. Hong Kong, Lee emphasized, is a “super connector” and “super aggregator of value”, linking China’s mainland with the North Global and the South Global, and attracting all types of foreign investment to China.
Now compare this with the prevailing view of Hong Kong in US business circles. The US Chamber of Commerce in Hong Kong is shocked, emphasizing that US businessmen simply don’t understand the National Security Law directive approved in March, which complemented the National Security Law installed by Beijing in 2020.
For Beijing, these are extremely serious security issues – ranging from a crackdown on money laundering to preventing the proverbial fifth column from launching a color revolution like the one that almost destroyed Hong Kong in 2019. It’s no wonder that many US investors can’t.
Zhang Kun, manager of the Blue Chip Mixed Fund, administers four funds with combined assets of US$ 8.9 billion. He prefers to focus on Xi’s goal of boosting the per capita GDP to equal that of the West by 2035.
If that happens, with or without a trade war with the US – and the Chinese won’t hesitate to achieve it – then the per capita GDP could reach around US$ 30,000 (it was US$ 12,300 last year, according to Chinese think tanks).
Then, foreign investment will continue to be welcome in China, via Hong Kong or not. But in all aspects, what surpasses everything is national security. Call it a practical exercise in sovereignty.
Pepe Escobar – Independent geopolitical analyst, writer, and journalist
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