by Pepe Escobar, Strategic Culture:
The New Silk Roads, or BRI, as well as the integration efforts of BRICS+, the SCO and the EAEU will be on the forefront of Chinese policy.
Liu He studied economics at Renmin University in China and got a Master’s from Harvard. Since 2018, he’s one of China’s Vice Premiers – along with Han Zheng, Sun Chunlan, and Hu Chunhua. He’s a Director of the Central Financial and Economic Affairs Commission and heads the China Financial Stability and Development Committee. Anyone around the world who wants to know what will drive China’s economy in the Year of the Rabbit must pay attention to Liu He.
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Davos 2023 has come and gone: an extended exercise in Demented Dystopia with peaks of paroxysm. At least a measure of reality was offered by Liu He’s address. A limited but competent analysis of what he said is infinitely more useful than torrents of barely disguised Sinophobic “research” vomited by U.S. Think Tankland.
Liu He pointed to some key numbers for the Chinese economy in 2022. Overall 3% growth may not be groundbreaking; but what matters is value-added for high-tech manufacturing and equipment manufacturing going up by 7.4% and 5.6% respectively. What this means is that Chinese industrial capacity continues to move up the value chain.
Trade, predictably, reigns supreme: the total value of imports and exports reached the equivalent of $6,215 trillion in 2022; that’s an increase of 7.7% over 2021.
Liu He also made it clear that improving the wealth of Chinese citizens remains a key priority, as enounced in the 2022 Party Congress: the number of middle class Chinese, by 2035, should jump from the current 400 million to an astonishing 900 million.
Liu He pointedly explained that everything about Chinese reforms revolves around the notion of establishing “a socialist market economy”. This translates as “let the market play a decisive role in resources allocation, let the government play a better role.” That has absolutely nothing to do with Beijing privileging a planned economy. As Liu He detailed, “we will deepen SOE [State-Owned Enterprises] reform, support the private sector, and promote fair competition, anti-monopoly and entrepreneurship.”
China is reaching the next level, economically: that translates as building, as fast as possible, an innovation-driven commercial base. Specific targets include finance, tech, and greater productivity in industry, as in applying more robotics.
On the fin-tech front, a resurgent Hong Kong is bound to play an extremely important role starting by 2024 – most of it in consequence of several Wealth Management Connect mechanisms.
Enter, or re-enter the key role of the Guangdong-Hong Kong-Macao Greater Bay Area – one the key development nodes of 21st century China.
What is known as the Greater Bay Area’s Wealth Management Connect is a set up that allows wealthy investors from the nine mainland cities that compose the area to invest in yuan-denominated financial products issued by banks in Hong Kong and Macao – and vice-versa. What this means in practice is opening up mainland China’s financial markets even further.
So expect a new Hong Kong boom by 2025. All those dejected by the collective West’s morass, start making plans.
Dual circulation hits Eurasia
As expected, Liu He also referred to the key Beijing strategy for this decade: “A new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other.”
The dual-circulation strategy reflects the Beijing leadership’s emphasis on simultaneously boosting China’s self-reliance and its vast export market footprint. Virtually every government policy is about dual circulation. When Liu He talks about “spurring of China’s domestic demand” he’s sending a direct message to global exporters – Eastern and Western – focusing on this ever-growing, gigantic mass of Chinese middle class consumers.
On the geopolitical and geoeconomic Big Picture, Liu He was diplomatically circumspect. He just let it filter that “we believe that an equitable international economic order must be preserved by all.”
Translation: the New Silk Roads, or BRI, as well as the integration efforts of BRICS+, the SCO and the EAEU will be on the forefront of Chinese policy.
And that brings us to what should become one of the key stories of the Year of the Rabbit: the renewed drive along the New Silk Roads.
Few better than the Chinese, historically, understand that from Samarkand to Venice, from Bukhara to Guangzhou, from Palmyra to Alexandria, from the Karakoram to the Hindu Kush, from deserts that used to engulf caravans to gardens of secluded harems, a formidable pull of economic, political, cultural and religious factors not only linked the extremities of Eurasia – from the Mediterranean to China – but determine and will continue to determine its centuries-old history.
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