Category: Economics

2017 NPC: Centralizing While Attempting to Reform

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Prof. Manoranjan Mohanty, Honorary Fellow, ICS & Vice-President, Council for Social Development, New Delhi

The ten-day session of China’s parliament – the National People’s Congress (NPC) – that concluded on 15 March was not an ordinary annual event that puts its stamp of approval on the already worked out policies by the leadership of the Communist Party of China (CPC). This was the last session of the nearly 3,000-member 12th NPC that was formed along with the assumption of the office of the president by party general secretary Xi Jinping. In many ways it gave a preview of the things to come at the 19th Congress of the CPC later this year in October-November.

Two areas threw up some conspicuous trends. First, Xi’s political leadership and his perspective on domestic and international issues were affirmed. Second, the need for strict measures to maintain stability in the country as a whole – and in Xinjiang and other ethnic minority areas, in particular – was reasserted. Whether these measures will prove adequate in coping with emerging challenges is an open question. Continue reading “2017 NPC: Centralizing While Attempting to Reform” →

Structural Transformation in the Chinese Economy: From Manufacturing to Services

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Zhang Bin, PhD, Senior Fellow, China Finance 40 Forum & Chinese Academy of Social Sciences, Beijing

A version of this article was originally published in the Business Standard as ‘The way forward for the Chinese economy’, 18 March 2017. This is part of a series by Chinese economists facilitated by the ICS.

As part of the cycle of economic development, all advanced economies have undergone industrialization and post-industrialization. Industrialization involved the manufacturing sector’s focus on increasing GDP, employment rate and consumption of manufactured products. For China, the post-industrialization phase implies economic activities will be concentrate in the service industry.

Based on measures of income level, the rate of growth of the manufacturing sector, employment rate and the consumption of manufactured products, China has passed the peak of industrialization. If global experience is a guide, the peak of industrialization happens when per capita GDP ranges between US$8,000 and US$10,000 (PPP based on 1990 value). After reaching the peak of US$10,000, the proportion of the industrial sector indicators continues to decline. By this yardstick, China has passed the peak of industrialization. Continue reading “Structural Transformation in the Chinese Economy: From Manufacturing to Services” →

China’s SAARC Bid and Implications for India

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Gauri Agarwal, Research Intern, Institute of Chinese Studies 

Pakistan’s support to China for full membership to SAARC and India’s refusal to entertain the bid is a case of the use of geopolitics to pursue selfish aims. Whether China will be accepted or not remains to be seen, but what China brings to the table needs a careful cost-benefit analysis.

SAARC’s Shortcomings

The importance of SAARC as a regional organization is recognised by all leaders. But there is a frank acknowledgement that the organization has failed to live up to the hope and aspiration of one-fifth of humanity. Continue reading “China’s SAARC Bid and Implications for India” →

Chinese Steel Industry’s Improving Performance and Implications for India

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Aravind Yelery, PhD, Assistant Director, Institute of Chinese Studies

China recorded the highest global production of steel in 2016 despite its slowed growth rate. This suggests that steelmakers were focused on boosting output because they were eager to capture higher profit margins.

Steel production in China increased to 68,510 thousand tonnes in October 2016 from 68,170 thousand tonnes in September. Monthly production in China averaged 29,010.98 thousand tonnes from 1990 until 2016, reaching an all time high of 70,650 thousand tonnes in March 2016 with a record low of 4,918 thousand tonnes in February 1990. The rising trend in capacity continued from 2015 when China’s national steel output was 1.1235 billion tons, up by 0.6 percent over the previous year. Continue reading “Chinese Steel Industry’s Improving Performance and Implications for India” →

CPEC: Views of the Business Community in Pakistan

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Jyotishman Bhagawati, Research Intern, Institute of Chinese Studies 

The China Pakistan Economic Corridor has created a sense of both euphoria and scepticism in Pakistan. The euphoria is because of the size and scale of the corridor project which is expected to create 700,000 direct jobs and whose total cost, according to a Deloitte study, is estimated to touch US$75billion upon completion [1]. At the same time, there are also increasing concerns over the project primarily due to the lack of concrete details about the various schemes falling under it which the government is accused of not sharing with the public [2]. Against this backdrop, it is imperative to note the perceptions of the business community in Pakistan regarding the CPEC as it is one of the most crucial stakeholders in the project. Continue reading “CPEC: Views of the Business Community in Pakistan” →

India and China: A Red Hot Affair!

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Kajari Kamal, Ph D. Scholar, University of Hyderabad

I was recently gifted a Redmi Note 3, a smartphone developed by Xiaomi Inc., the third largest mobile phone manufacturer in the world. The gift was a huge surprise and I excitedly flipped the box to read the specifications. What caught my attention immediately was a ‘Made in India’ tag shining in bright red, possibly the only thing in red on a Redmi phone box! Being a keen student of Chinese history, the choice of the name “Xiaomi” (small grain of rice) intrigued me and I started to read about the company. Xiaomi is a Chinese word for “millet” and Xiaomi’s CEO links the “Xiao” part to the Buddhist concept that “a single grain of rice of a Buddhist is as great as a mountain”. Continue reading “India and China: A Red Hot Affair!” →

BRICS: Cooperation or Cynicism?

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Aravind Yelery, PhD, Assistant Director & Associate Fellow, Institute of Chinese Studies

नुकत्याच संपलेल्या 8 व्या ब्रिक्स बैठकीत सहभागी विकसनशील देशांनी ‘गोवा जाहीरनामा’ स्वीकारला. या बैठकी दरम्यान आणि नजीकच्या काळात प्रादेशिक आणि जागतिक राजकारणात नवीन राग-रंग उजळून समोर आले. दहशतवादाचा मुद्दा, दुटप्पी धोरण आणि गुंतागुंतीच्या आर्थिक बाबींवर ब्रिक्स सारख्या महत्वाच्या संघटनेची नक्की भूमिका काय हे मात्र ठळकपणे अधोरेखित झाले नाही. सर्वात महत्वाचे म्हणजे चीन सारख्या देशाचे जागतिक स्तरावरील राजनय कसे ठिसूळ आणि दुटप्पी झाले आहे हे दिसून येते. Continue reading “BRICS: Cooperation or Cynicism?” →

Tibet’s Place in China’s ‘Belt and Road’ Initiative

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Tshering Chonzom Bhutia, PhD, Associate Fellow, Institute of Chinese Studies

By now, China’s “Belt and Road Initiative” (BRI) is familiar to scholars and officials around the world. It has become the catchphrase for all of China’s international outreach, including conferences, seminars, and delegation visits to and from China. However, China has not completely reassured its neighbors. The various terms and phrases that have been used to refer to this idea embody the contention surrounding it – from the Silk Road Economic Belt (SREB) and Maritime Silk Route (MSR), to One Belt One Road (OBOR), to the current BRI. More broadly, some describe it as “strategy,” others call it a “project” with the Chinese now settling on “initiative.”

Having played an important role in the whole Silk Route trade route historically, India finds China’s attempt to revive it in the modern context without any consultation with Delhi troubling. Continue reading “Tibet’s Place in China’s ‘Belt and Road’ Initiative” →

Tax Reforms in China: The Year Ahead

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Aravind Yelery, Associate Fellow, Institute of Chinese Studies.

China’s ‘new normal’ rate of economic growth also means fall in revenues and possible uncontrolled expenditure patterns in China. In this situation “deepening the reform of the tax system [and] establishment of a modern financial system”[1] become important. The leadership is under overwhelming pressure to revamp its tax system to suit changing fiscal dynamics. The People’s Bank of China (PBoC) is planning to reduce the tax burden on Chinese businesses and raise hopes of economic growth. Since April 2016, the PBoC has convened a series of meetings of its various departments in Beijing to discuss the way forward and plan the ground for the upcoming 13th five year plan and tax reforms were flagged as the top priority.[2] The closed-door meeting called for tax cuts and a gradual expansion of tax bases. This signals a willingness of leadership to take new and concrete steps toward reducing business taxes in China, streamlining the tax system and integrating various tax-related laws in 2016.

Continue reading “Tax Reforms in China: The Year Ahead” →

China’s Burgeoning Overseas Investments

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Ambassador (retd.) Kishan S Rana, Honorary Fellow, Institute of Chinese Studies.

Today’s newspapers carry a remarkable news item. In 2015, China’s total overseas direct investment (ODI) was $106.8 billion. In less than six months of 2016, this was overtaken with a total of $110.8 billion, making the country the world’s biggest ODI investor, ahead of the US.

Continue reading “China’s Burgeoning Overseas Investments” →