By Anjan Roy
China
is now in fashion in the global circuit. The Davos Man, as the elite and the
glitterati of the world are referred to, is only chattering about China and
what is happening there.
Under
Xi Jinping China had suddenly burst upon the world like never before. Since
assuming the supreme leader’s role, Xi has taken the country out of the former
shell and now wants to make the world dance to its tunes. It has inevitably
brought on clashes with the United States and this is the topic of conversation
at Davos.
The
World Economic Forum’s annual meet in the Swiss village in the Alps has become
an extended committee for managing the world economy. In the five days of
confabulations among the world’s rich and powerful the fate of the world
economy is as if decided over formal panel discussions, informal chats,
official and unofficial dinners and lunches.
If
one single person is dominating the show at Davos this year it is Chinese vice
president Wang Qishan. Wang has been the close confidant of Xi Jinping and supported
him on his anti-corruption drive. At Davos he made the main Chinese
presentation, which has been most minutely interpreted by the congregated
economic and political leaders. In the absence of Donald Trump, who cancelled
his trip, Wang’s observations would give the clue to the inner workings of the
US-China spat.
But
for his speech, Wang did not mention the US president even once, though his
entire presentation was a refutation of the US position and putting forth the
alternative version.
In one
such dinner meet, as reported by Bloomberg, hosted by one of China’s most
powerful government economic managers, CEOs of the cream of Chinese companies
and another set of some 20 of world’s biggest corporates had a brainstorming
session on current realities of Chinese economic policies. Many of the
international corporations had reportedly complained of policy shortfalls and
consequential distresses. It is unheard of that such grievances could be aired
in meetings with government higher-ups if the meeting was being held on the
mainland.
But
then, there were other points of view as well. In an open interview, the
chairman of PIMCO, one of the largest investment funds, dispelled all fears
about Chinese economy getting into a slump. It was sated that China was one of
the best-run countries in the world and each one of its leaders and high
officials had invariably gone through rigorous training and exposure. Their
experience would be rich enough and that collective wisdom could guide the
country to desired destinations.
One
can some time detect the underlying objectives of interlocutors at different
kinds of interactions. Corporates have to do business and China is a massive
market which few can eschew. Open fora can be useful for solicitations. At the
same time, the players need to air their pains when arms are twisted on the
ground.
Three
distinct notes are discernible in the babble. First is the ramifications of
US-China tussle; the second, is the fear of China slowing down drastically and
thereafter its consequences; thirdly, the chances of a striking a deal. The
so-called Davos Man is deliberating on all three of these this year.
China
had been growing at a fast clip, sometimes at 9% to 10%, a year for many years.
With its size of economy, China cannot any longer grow at that rate. The
country has to slow down to remain stable. The economic managers of the country
were acting feverishly to bring out such an outcome. This is the process of
soft landing for the economy as opposed to a collapse or crisis, what is commonly
called a hard landing.
Now
that China is slowing down, concerns have mounted whether the slow-down is a
managed process or the slackening of the pace could gather its own momentum and
result in a sort of crash. Because this is a classical conundrum: you either
grow or else collapse. The Chinese managers have to prove that the western
binary options could be avoided and still can manage a softer landing with
gradually slowing growth rates.
No
doubt that the trade tiff is already starting to bite the Chinese economy hard.
Being export-oriented, it is no easy task to reset to a model of domestic
consumption-based economy. In fact, this year the Chinese are buying far fewer
automobiles and this itself is giving a jolt. The government is pushing incentives
and concessions to cajole the Chinese to buy more cars. But that is not easy.
Other
kinds of fiscal stimulus are also being introduced, but some of these can, in
fact, backfire. On earlier occasions, faced with slowdown, the Chinese economic
managers would kick in a process of massive infrastructure building, which
could create demand for sectors like steel or cement. But that also has its
limits. Infrastructure facilities are so extensive that you have really to
invent where to build fresh ones. It is being said that this time around,
Chinese are again expending their railway network.
Given
the weak economic data and increasing pressure that the dispute is bringing on
China, is it likely that a quick resolution might be on way. At least, doing by
the rhetoric of the Chinese leadership at Davos, the indications are to the
contrary. They are faring their views on not cowing down any more before
neo-imperialist forces. But then, you never know. Behind the closed doors any
concessions might be in order if that means a prop for the supreme leaders.
After all, Xi is playing out over a very long period, the democratic countries
have only limited playtime. (IPA
Service)
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