Economic and Political Outlook in China in the Xi-Li Era

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Junhua Wu

Economic and Political Outlook on

China Under the Xi-Li Era

WWICSSeminar,May 30,

2013

Senior ScholarWoodrow Wilson International Center for Scholars

May 30, 2013

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Does it make sense to forecast theshort-term economy?

Is it true that the consumptiondemand is weak?

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Government determines short-term economic growth performance.

Q. Does it make sense to forecast the

short-term economy?

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Real GDP Growth Rate(%)

Source: National Bureau of Statistics of China

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Q. Is it true that the consumptiondemand is too weak?

Getting Rid of the Dependence on High Growth is Essential.

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Ratio to GDP GDP Consumption

Trend of Nominal GDP and Consumption Demand Growth(1979-2012)

(%) (%)

Source: National Bureau of Statistics of China.

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Bureaucratic Capitalism is an

Impediment to sustainable growth

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GDO(left) Fical Revenu(right)

Central Gov't Revenue(right) Fiscal Revenue (left)

Central Gov't (left)

(1993=1) (Ratio to GDP)

Government Is the Biggest Beneficiary of Economic Growth

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RedGuard ()

Q. How Far Could Xi Go?-From Political Point of View

Features of Xi Jinping administration

Second Generation of Senior Officials () Maintaining current regime seen as their mission

Educated Youth () Destroyers of existent order as well as idealist

Better understanding to disadvantaged population

1966-68 Middle & High School ()/ 1977-79College Graduates ()

Advance education background

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Five Nos

No multi-party system

No alteration of ideology

No separation of powers & bicameral system

No federal system, and

No privatization

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Seven DontsDont talk about universal values.

Dont talk about freedom of press.

Dont talk about civil society.

Dont talk about civil rights.

Dont talk about mistakes in the Partys history.Dont talk about crony capitalism.

Dont talk about judicial independence.

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Two No-Repudiates

1. Dont use what happened after the1978 economic reform began to

repudiate what happened before it.

2. Dont use what happened before1978 to repudiate what came after.

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Three pillars that help

the Party survive

- Enhancing ideological control

- Chasing the Chinese dream to embrace

the nationalist sentiment, and- Cracking down corruptions

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Three pillars that help

the Party survive

- Enhancing ideological control

- Chasing the Chinese dream to embrace

the nationalist sentiment, and- Cracking down corruptions

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Take-away Question

How should the world deal with a wealthierand stronger China if it does notfundamentally change its political systembut keeps its door open to the world through

trade, investment and other economicactivities?

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Thank you!