CHINA
AND GLOBAL SOUTH – ECONOMY
NEWS:
CEWC met on December 11 and 12 under
the shadow of the incoming Trump administration in the US.
WHAT’S
IN THE NEWS?
Purpose
and Context of CEWC
- Annual
Assessment: CEWC evaluates China’s economic performance and outlines future
policies.
- Political
Context: The 2023 CEWC (held on December 11-12) followed a Politburo
meeting that set the tone for economic directions.
- External
Challenges: Took place amid worsening international economic conditions,
including concerns about U.S. policies under Trump.
Key
Developments in CEWC 2023
A.
Shift in Monetary Policy
- From "prudent monetary policy" to a "moderately
loose monetary policy".
- Measures include:
- Lower
interest and mortgage rates.
- Reduced
bank repo rates.
- Increased
issuance of long-term treasury bonds.
- Aims to stimulate domestic demand and consumption instead of
heavy infrastructure investment, marking a significant policy change since
the 2008 financial crisis.
B.
Fiscal Policy Adjustments
- Historically conservative fiscal policy with a 3% fiscal deficit
limit now relaxed.
- Anticipation of a 4% fiscal deficit in 2025, signaling a
willingness to take on more fiscal risk.
C.
High-Quality Growth Model
- Continued focus on "high-quality" and technology-driven
growth under President Xi Jinping.
- Promotion of:
- Digital
economy.
- Artificial
intelligence.
- Industrial
policy supporting "new type of industrialization."
- Xi prioritizes long-term economic restructuring over immediate high
growth rates.
D.
Balance Between Growth and Development
- Shift from "prioritizing development before addressing
problems" to balancing growth pace with development quality.
- Willingness to accept moderated short-term growth to advance
high-tech industries.
Notable
Omissions and Focus Areas
- BRI Omission
in CEWC Report: Belt and Road Initiative (BRI) not explicitly mentioned.
- Acknowledgment
of External Risks: Acknowledged international turbulence in a separate meeting with
leaders of global economic organizations.
- Engagement
with the Global South: Reiterated BRI’s importance for the Global South’s development,
seeking partnerships with international organizations.
Relations
with the United States
- Trade and
Tech Tensions: Xi criticized U.S. strategies like "small yard, high
fences" for escalating trade wars.
- Potential for
Dialogue: Expressed openness to dialogue for mutual benefit while warning of
potential retaliation.
- Tit-for-Tat
Responses:
- Restrictions
on rare metal exports (e.g., gallium) to the U.S.
- Investigation
into Nvidia for anti-trust violations.
- Proposal
to increase U.S. oil and gas imports in future deals.
Diversification
of Trade and Investment
- Shifting
Focus to Global South:
·
Target regions: Southeast Asia, Gulf, Africa, and Latin America.
·
Example: Latin America surpasses the U.S. in supplying agricultural
products to China.
- Geopolitical
and Economic Reorientation:
·
China views the Global South as critical for future trade and investment
partnerships.
·
BRI remains central to strengthening ties with developing nations.
Implications
for India
- Increased
Competition: China’s focus on the Global South intensifies competition for
influence with India.
- India’s
Missed Opportunities:
- India has
not yet capitalized on global supply chain shifts away from China.
- Corporate
voices suggest potential gains from China's reduced reliance on U.S. and
Western markets.
- Strategic
Calculations Needed:
- India must
carefully evaluate the shifts in China’s economic strategies to avoid
adverse outcomes.
Source: https://www.business-standard.com/opinion/columns/china-turns-to-global-south-ahead-of-trump-tariffs-india-needs-to-be-wary-124121701366_1.html