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(2020-05-25 14:12:47) 下一个

China’s economic strategy shift shows Xi Jinping is preparing for ‘worst case scenario’, analysts say

  • The Chinese president said that Beijing was pursuing a new development plan, focusing on its domestic market rather than an export-led growth model
  • China’s economy is under pressure from the coronavirus, as well as escalating trade war and technology tensions with the United States

China’s move to double down on a pivot away from export-led growth in favour of developing its domestic market reflects a strategic shift by Beijing to prepare for the “worst case scenario” after the coronavirus pandemic, according to analysts.

President Xi Jinping told dozens of top economic advisers in Beijing at the weekend that China was pursuing a new development plan in which “domestic circulation plays the dominant role”.

“For the future, we must treat domestic demand as the starting point and foothold as we accelerate the building of a complete domestic consumption system, and greatly promote innovation in science, technology and other areas,” Xi said in comments published by the official Xinhua News Agency.

Xi’s remarks suggest that Beijing is moving towards giving up the “great international circulation” strategy adopted in the 1990s that helped fuel its growth to become the world’s second-largest economy.

“It’s a kind of preparation for the worst-case scenario, including the decoupling with the United States and even the whole Western world,” said Hu Xingdou, a Beijing-based independent economist.

Hu said China has no choice but to face the adversity, but warned that it must not undo its market reforms and not go back to the closed nature of a command economy where the central government makes all economic decisions.

Instead, Hu said China should expend more effort convincing the rest of the world that it has no intention of building an economic model that is different from the
current global system.

Under the previous export-oriented strategy, a government policy literally translated from Chinese as “big in, big out”, China positioned itself as the manufacturing link in global value chains by importing components and then re-exporting finished goods for consumer markets.

The system had worked well after its entry into the World Trade Organisation in 2001 and helped the country become the so-called workshop of the world; but the model has started to lose its shine in recent years, with China struggling to move up the value chain.

This development, coupled with a trade war and technology rivalry with the United States, and an expected fragmentation of the global economy after the coronavirus pandemic, has encouraged Beijing to seek self-sufficiency in future.
Xi’s speech on Saturday offered the clearest clues so far regarding the Chinese leader’s thinking on economic strategies in response to Washington’s decoupling threats.

According to Xi, China faces unfavourable winds in the outside world, including a deep recession in the global economy, disruptions to international trade and investments, “rampant protectionism and unilateralism” and geopolitical risks.

“We now have to seek development in a more unstable and uncertain world,” Xi said.

Xi also urged China to become more self-reliant in technology and marketplace, and in particular named the digital economy, smart manufacturing, health and life science and new materials as sectors that China needed to concentrate on to drive growth.

China, according to Xi, will stand on the “right side of the history” to insist on multilateralism, while it will also not close itself off from the outside world. Instead, China will “unswervingly” push ahead with globalisation in the direction of “openness and inclusiveness”, Xi said.

Xi’s latest comments had echoes of his speech at the World Economic Forum in Davos in 2017, when he also promoted globalisation. At the time, it was viewed as a strong, public rebuke of the newly inaugurated US president, Donald Trump.

Raymond Yeung, ANZ Bank’s chief Greater China economist, said China’s strategic shift comes from a worry that external demand will not recover in the next two or three years.

“It’s the direction of economic transformation. The question is, how?” Yeung said.



Can we trust that Beijing’s security law will target Hong Kong’s violent minority only?

    Though details are forthcoming, China’s national security laws are expressed in broad terms and have been used to target critics and suppress dissent

After an extraordinary year marked by months of civil unrest and the Covid-19 outbreak, there were hopes that normal life might finally return to Hong Kong. But as most of the world continues to battle the deadly pandemic, Hong Kong faces an existential threat of a different kind.

Beijing’s decision to impose a new national security law on the city has plunged it into a new era of fear and uncertainty. The details are not yet known and officials are scrambling to offer reassurance. But once this law is in place, life in Hong Kong may never be the same again.

A resolution was tabled at the annual meeting of China’s top legislative body, the National People’s Congress, last week. It empowers the NPC’s standing committee to pass a security law for Hong Kong, possibly as soon as next month. Such a law would “prevent, frustrate and punish any secessionist or subversive activity, the organising of terrorist acts, and other acts that seriously threaten national security, as well as activities of foreign and external interference in Hong Kong,” said the resolution, which is expected to pass on Thursday. An enforcement mechanism will be put in place and China’s security agencies will be allowed to set up in Hong Kong.

The law has been presented as a means of stamping out the violence which rocked Hong Kong during months of unrest. But there are already many laws for dealing with such offenders and thousands have been arrested.

The concern is that the security law also has the potential to severely curb freedoms and limit discussion of sensitive issues. There are fears it will be used as a weapon to target opposition figures and critics of Beijing. It could fuel a brain drain, drive away business, undermine the rule of law and ultimately deprive Hong Kong of its special qualities.

The law is a response to anti-government protests which saw frequent vandalism and violent clashes with police. The national flag was trampled on and China’s representative office daubed with graffiti. It was all too much for Beijing.

Supporters of the protesters have sought help from foreign governments, notably the United States, which has passed a law threatening sanctions if Hong Kong’s high degree of autonomy is undermined. All this at a time of heightened Sino-US tensions over trade and the pandemic. Hong Kong is at the mercy of geopolitical forces it cannot control.

The threat of Beijing’s sweeping national security law has haunted the city for more than 30 years. In the wake of the bloody Tiananmen crackdown in 1989, changes were made to the final draft of what was to become Hong Kong’s de facto constitution.

But three important words were also included in what became the notorious Article 23 of the Basic Law. Hong Kong was to pass the security laws “on its own”. This is arguably the most striking feature of the city’s high degree of autonomy. Beijing’s move to override it and pass the security laws itself marks a dramatic shift in the balance between “one country” and “two systems”.

Beijing has lost its patience with Hong Kong. The laws the city was required to pass have still not been enacted 23 years after the handover.

A bid in 2003 to pass legislation on treason, sedition, secession, subversion, state secrets and links with foreign groups was shelved after 500,000 took to the streets to oppose it. Successive chief executives avoided making a fresh attempt to pass the laws, knowing how divisive it would be.

But that sunny day of the 2003 march belongs to a different time. The protest prompted the central government to take a more hands-on approach to Hong Kong. I wrote in 2004 that the city may come to regret not passing the security laws at that relatively peaceful time. The proposed legislation had seen three revisions and 51 amendments as the government responded to the concerns of Hong Kong people. It is likely that the law soon to be passed in Beijing will be much more oppressive.

Officials are trying to spin the new law as one which will target only a small minority of violent troublemakers and safeguard the rights of the majority. This argument is unconvincing.

China’s national security laws are expressed in broad terms and have been used to target critics of the government, including activists, journalists and lawyers. The law against subversion, for example, includes jail for those who subvert state power by “spreading rumours or slanders or any other means”. It could easily be applied to all sorts of legitimate expressions of opinion.

If the laws are to respect rights and freedoms they must be clearly and narrowly defined. They must also only restrict rights to the extent genuinely necessary to protect national security. A failure to meet these requirements would normally lead Hong Kong’s courts to strike out the offending provisions.

But the judges will be placed in an unenviable position. If they declare parts of the law to be unconstitutional, they will face a fierce backlash from Beijing. Ultimately, the issue is likely to be decided by the central government anyway, through a binding interpretation of the Basic Law.

The protests that rocked Hong Kong had died down during the virus outbreak. This provided an opportunity for the government to reach out to its opponents in a bid to narrow differences. Instead we have seen a hardening of the government’s position, the arrest of leading democrats, the seizing of control in the legislature, and pressure applied both to the official broadcaster RTHK and the education sector to be more politically correct.

Officials tend to talk about the opposition as if it is limited to a small band of “terrorists”. They seem to forget that up to two million people marched against proposed extradition laws last year and that the calls by protesters for universal suffrage and police accountability enjoy widespread support. The landslide victory for the democrats in the District Council elections in November is evidence of that.

The future is uncertain. The new law is intended to stop the violence, but is likely to fuel further turmoil and division. We await the details, but the indications are it will be used to muffle opposition voices and restrict the space for public discussion. With each step, Hong Kong becomes more like mainland China. We hope for the best, but fear the worst.









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