Page 10 - 2015_WhitePaper_web
P. 10
5 White Paper on the Business Environment in China
1.1 Just Do It (in 2013)
( e following sections have been incorporated from our 2013 White Paper.)
Standing Still or Turning Back Would be and elimination of agricultural taxes helped raise
A Dead End incomes for China’s 650 million rural dwellers.
LONG YONGTU, THE man who negotiated China’s In the nancial sector, the big four state-owned banks
entry into the WTO in the late 1990s, is worried. “ e cost were listed on the public markets, bringing an element
of [failing to reform] could be high,” he told a symposium in of market discipline to their lending decisions. Interest
2012, adding that “essentially, after 10 years, it seems China is rates, a key instrument of economic rebalancing, have
drifting away from the WTO.”1 been partially liberalized. at means higher returns
to household savers a step to increasing incomes and
Expanding on his concerns, Mr. Long argues that, “A boosting consumption.
statist model that denies fair competition for all enterprises,
domestic and foreign, could sti e China’s economic growth,” China’s exchange rate another instrument of
and that “[China] cannot only have large-scale and state- rebalancing has also been liberalized. e yuan has
owned enterprises. at is only the skeleton of the economy. risen 31 percent against the dollar since the peg was
We need thousands upon thousands of small and medium- broken in 2005. In 2012, the band in which the yuan
sized private enterprises. ey are the esh and blood of the trades was widened giving the markets a great say in
Chinese economy,” reinforcing the argument made in section how it moves.
1.2 of this White Paper. 1
A stronger currency has helped reduce the imbalance
Mr. Long’s concerns are not unique to him, either. in China’s trade, with the current account surplus
Increasingly, diverse stakeholders seem to agree that despite shrinking to 2.8 percent of GDP in 2011 from a high
rhetoric and ideology, reality in China demands substantive of 10.1 percent in 2007.
political reform.
Rebalancing is also receiving support from forces
“In a sense, both the CCP and its critics agree on the need outside of the government’s control. A diminished
for political reform,” writes Wall Street Journal commentator supply of workers is driving up wages at a rapid clip.
Yiyi Lu. “Critics argue that the Party cannot stay in power for Liu Xingshun, a 40-year-old migrant worker from
much longer if fundamental reforms are not introduced—a Jiangxi province, currently working in a furniture
notion echoed by an essay in the latest issue of the CCP’s factory in Shenzhen, told China Real Time he made
own theoretical journal, Seeking Truth, that called for further about 1,000 yuan ($160) a month in the year 2000.
reform and opening-up. ‘[S]tanding still or turning back Now he makes 4,000 to 5,000 yuan.3
would be a dead end,’ it said.”2
Although “Higher wages are essential to fuel an increase
“But even declarations of the need for reform from the in China’s household consumption, […] key elements of
likes of Chinese leader Hu Jintao—who warned in a July the reform agenda, from opening state-dominated sectors of
23 [2012] speech that the party must ‘never ossify, never the economy to competition, to strengthening farmers’ land
stagnate’—fail to convince critics that the party is willing rights, and reforming the iniquitous system of urban and rural
or able to undertake reforms that would genuinely tackle residence rights, remain undone.”3
corruption or threaten vested interests.”2
In last year’s White Paper, we argued that further reform
Progress has certainly been made in terms of further and ‘opening up’ is not yet complete:
reform and ‘opening up’. In a survey of China’s economic
performance under President Hu and Premier Wen, e Wall We are not alone in advocating further reform: China
Street Journal’s China Real Time blog observed that: Investment Corporation Chairman and CEO Lou
Jiwei last year argued that although reform e orts
Top of the list of achievements is improved public
services and welfare provision. Education spending hit
4 percent of GDP in 2011, up from 2.2 percent in
2002. Health and pension coverage have expanded,
10
1.1 Just Do It (in 2013)
( e following sections have been incorporated from our 2013 White Paper.)
Standing Still or Turning Back Would be and elimination of agricultural taxes helped raise
A Dead End incomes for China’s 650 million rural dwellers.
LONG YONGTU, THE man who negotiated China’s In the nancial sector, the big four state-owned banks
entry into the WTO in the late 1990s, is worried. “ e cost were listed on the public markets, bringing an element
of [failing to reform] could be high,” he told a symposium in of market discipline to their lending decisions. Interest
2012, adding that “essentially, after 10 years, it seems China is rates, a key instrument of economic rebalancing, have
drifting away from the WTO.”1 been partially liberalized. at means higher returns
to household savers a step to increasing incomes and
Expanding on his concerns, Mr. Long argues that, “A boosting consumption.
statist model that denies fair competition for all enterprises,
domestic and foreign, could sti e China’s economic growth,” China’s exchange rate another instrument of
and that “[China] cannot only have large-scale and state- rebalancing has also been liberalized. e yuan has
owned enterprises. at is only the skeleton of the economy. risen 31 percent against the dollar since the peg was
We need thousands upon thousands of small and medium- broken in 2005. In 2012, the band in which the yuan
sized private enterprises. ey are the esh and blood of the trades was widened giving the markets a great say in
Chinese economy,” reinforcing the argument made in section how it moves.
1.2 of this White Paper. 1
A stronger currency has helped reduce the imbalance
Mr. Long’s concerns are not unique to him, either. in China’s trade, with the current account surplus
Increasingly, diverse stakeholders seem to agree that despite shrinking to 2.8 percent of GDP in 2011 from a high
rhetoric and ideology, reality in China demands substantive of 10.1 percent in 2007.
political reform.
Rebalancing is also receiving support from forces
“In a sense, both the CCP and its critics agree on the need outside of the government’s control. A diminished
for political reform,” writes Wall Street Journal commentator supply of workers is driving up wages at a rapid clip.
Yiyi Lu. “Critics argue that the Party cannot stay in power for Liu Xingshun, a 40-year-old migrant worker from
much longer if fundamental reforms are not introduced—a Jiangxi province, currently working in a furniture
notion echoed by an essay in the latest issue of the CCP’s factory in Shenzhen, told China Real Time he made
own theoretical journal, Seeking Truth, that called for further about 1,000 yuan ($160) a month in the year 2000.
reform and opening-up. ‘[S]tanding still or turning back Now he makes 4,000 to 5,000 yuan.3
would be a dead end,’ it said.”2
Although “Higher wages are essential to fuel an increase
“But even declarations of the need for reform from the in China’s household consumption, […] key elements of
likes of Chinese leader Hu Jintao—who warned in a July the reform agenda, from opening state-dominated sectors of
23 [2012] speech that the party must ‘never ossify, never the economy to competition, to strengthening farmers’ land
stagnate’—fail to convince critics that the party is willing rights, and reforming the iniquitous system of urban and rural
or able to undertake reforms that would genuinely tackle residence rights, remain undone.”3
corruption or threaten vested interests.”2
In last year’s White Paper, we argued that further reform
Progress has certainly been made in terms of further and ‘opening up’ is not yet complete:
reform and ‘opening up’. In a survey of China’s economic
performance under President Hu and Premier Wen, e Wall We are not alone in advocating further reform: China
Street Journal’s China Real Time blog observed that: Investment Corporation Chairman and CEO Lou
Jiwei last year argued that although reform e orts
Top of the list of achievements is improved public
services and welfare provision. Education spending hit
4 percent of GDP in 2011, up from 2.2 percent in
2002. Health and pension coverage have expanded,
10
