Beijing has 'really serious' headwinds but this year is a bit like 2021, professor says

Well, Beijing has really serious headwinds, as they've mentioned. But I think this year is a little bit like 2021, where you get enormous growth, mostly as a partial reversal of the horrible previous year. So last year, we saw a contraction in consumption, and we'll get a partial reversal of that. Frankly, I think China is going to achieve growth rates closer to 6% than to 5%. Well, Beijing has really serious headwinds, as they've mentioned. But I think this year is a little bit like 2021, where you get enormous growth, mostly as a partial reversal of the horrible previous year. So last year, we saw a contraction in consumption, and we'll get a partial reversal of that.

Frankly, I think China is going to achieve growth rates closer to 6% than to 5%. But we still need another month or two of consumption to see if that's indeed the case. Historically, the party has had a stop-start approach to the private sector, and yet we know every time the private sector is allowed to grow and thrive, it helps boost growth in the economy. There didn't seem to be a lot of comment over the weekend about any new position towards But we still need another month or two of consumption to see if that's indeed the case. Historically, the party has had a stop-start approach to the private sector, and yet we know every time the private sector is allowed to grow and thrive, it helps boost growth in the economy. There didn't seem to be a lot of comment over the weekend about any new position towards China's technology giants or indeed to the private sector as a whole. And there were some notable absences from the NPC like Pony Ma.

What do you think that implies for the role of the private sector in the growth that is now being planned? Well, this may seem a little bit surprising, but I'm not sure the causality runs in that direction. China's technology giants or indeed to the private sector as a whole. And there were some notable absences from the NPC like Pony Ma. What do you think that implies for the role of the private sector in the growth that is now being planned? Well, this may seem a little bit surprising, but I'm not sure the causality runs in that direction. I think it's when you allow the private sector to grow, the economy grows more. It may be the other way around. When there is more growth driven by what Beijing refers to as high quality growth, which is consumption and exports, then that tends to boost the private sector.

So what we really may be seeing and what we will probably see in future years is real weakness in consumption and perhaps in exports. I think it's when you allow the private sector to grow, the economy grows more. It may be the other way around. When there is more growth driven by what Beijing refers to as high quality growth, which is consumption and exports, then that tends to boost the private sector. So what we really may be seeing and what we will probably see in future years is real weakness in consumption and perhaps in exports. And that's what's going to constrain the growth of the private sector. I think sometimes we have the causality reversed when we think about the Chinese economy.

Talk about stimulus then, because again, I think as Sam pointed out in her report, there doesn't seem to have been a significant commitment to extend fiscal stimulus for the economy. We know there's been a lot of tinkering at the edges by the PBOC around the cost of capital. And that's what's going to constrain the growth of the private sector. I think sometimes we have the causality reversed when we think about the Chinese economy. Talk about stimulus then, because again, I think as Sam pointed out in her report, there doesn't seem to have been a significant commitment to extend fiscal stimulus for the economy. We know there's been a lot of tinkering at the edges by the PBOC around the cost of capital. What do you think we'll ultimately see with the government capitulate if growth isn't as strong as it hoped and start once again pumping money into state owned enterprises? Yes, it will.

If we don't get as much of a resumption in consumption as we were expecting, and of course if exports turn out to be very weak over the rest of the year, then the only way to achieve What do you think we'll ultimately see with the government capitulate if growth isn't as strong as it hoped and start once again pumping money into state owned enterprises? Yes, it will. If we don't get as much of a resumption in consumption as we were expecting, and of course if exports turn out to be very weak over the rest of the year, then the only way to achieve the growth target is the way they've always done it in the past by expanding investment either in the property sector, which of course is going to be constrained, or in infrastructure. They don't like to do that because there is a recognition that that's really not productive investment, and it's the source of the explosive growth we've seen in the last 10 years. But if growth, if they can't get growth through the good ways, through what they call high the growth target is the way they've always done it in the past by expanding investment either in the property sector, which of course is going to be constrained, or in infrastructure. They don't like to do that because there is a recognition that that's really not productive investment, and it's the source of the explosive growth we've seen in the last 10 years. But if growth, if they can't get growth through the good ways, through what they call high quality growth, then they will get it from expanding infrastructure spending. They always do.

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