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  • Dec 27, 2014
  • Updated: 9:34am
Xi Jinping

Further economic reforms a tough task, warns Xi Jinping

PUBLISHED : Monday, 10 February, 2014, 3:45am
UPDATED : Monday, 10 February, 2014, 4:27pm

Pushing through further economic reforms will prove tough and there may be dangerous times ahead, President Xi Jinping said in an interview with Russian state TV on the sidelines of the Sochi Winter Olympics.

"The easier reforms that could make everyone happy have already been completed. The tasty meat has been eaten up. The rest are tough bones to crack," Xinhua quoted Xi as saying. "[We] should dare to gnaw even tough bones and dare to ford dangerous rapids."

The Communist Party announced a series of reforms last November at a plenum of party leaders in Beijing, including giving more profits from state enterprises to the government and scrapping the re-education through labour prison system.

Critics have noted that there was no genuine political reform on Xi's agenda as the party seeks to retain its firm grip on power. However, Xi has consolidated his position by heading both newly established agencies announced at the plenum - a national security commission and a leading group to deepen reform.

During the interview, Xi also described the preparations for the Sochi Games as "first rate".

"Sochi is the right place for the Winter Olympics, the people are very welcoming and the city is energetic and charming. The city will be more famous after these Winter Olympics, attracting more tourists, including from China."

Xi said the Games would be a "truly unforgettable" festival of sport. Organisers had been criticised for delays in finishing some infrastructure and hotels.

China and Russia would continue to support each other on major issues and in international affairs and the trip to Sochi had helped further improve ties between the countries, Xi said.

"I am very satisfied with achievements in Sino-Russia relations. The foundation of current bilateral ties is strong, mutual trust has never been so close."

Xi also spoke about his private life. "Generally, I have little time of my own. The problem is, where has my time gone? Of course, it has been occupied with work," he said, referring to a line from a Chinese pop song Where Has Time Gone.

Xi said he spent most of his leisure time reading and he enjoyed Russian authors including Anton Chekhov and Leo Tolstoy. "I can remember vividly the great moments from their books," he said.

Xi also discussed his love of sport. "I like swimming, hiking and other sports. I learned to swim when I was four or five.

"The cities of Beijing and Zhangjiakou are bidding to host the 2022 Winter Games, so we are here to learn from the Russian people."


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Well of course, he has replaced all of the gatekeepers from the old regime with his own gatekeepers so now he gets the corruption. Mao is great. Mao is good.
Gee, some really insightful journalism here, keep up the great work SCMP /sarc
We should make stock from the bones, not gnaw of them :D
So, we produce to consume --- consumption by domestic residents (domestic consumption) or foreign residents (net exports or current account surplus).
And we invest to produce, not the other way around.
In short, we invest more to produce more to consume more, in that order.
Producing more to invest more, when there is no increase in the propensity to consume (by China's consumers) or to export (consumption by foreign consumers), is a dead end --- a country cannot increase its investment relative to output forever.
Our world is just that big. There are just so many consumers in total, no more.
Hence China's coming necessary reforms --- tough bones to crack.
(Adapted from the ‘American Phoenix’)
(While China-Germany comparisons by Abe and Aquino are 'not helpful',
my comparison below is not unreasonable.)
We work to live, not live to work.
Except for those workaholics.
And work means useful and productive work, not digging holes for others to fill.
Not Japan’s ‘river stabilization’ projects --- one of her legendary wasteful and corrupt public projects.
We invest to produce, not produce to invest.
Except for those Chinese local governments and SOEs (like those steel mills).
And Investment means useful and self-liquidating investment, not wasteful investment which causes excess capacities and unsustainably rising debts --- more means worse, or diminishing returns in economic jargon.
To make the monetary union in Europe a success, and to shed the excessive labour costs built up in 1990-97 as a result of German reunification, Germany imposed quintuple deflation (exchange-rate, monetary, fiscal, demographic and restructuring) by brute force, more than a decade ago.
Now it shows that the great efforts are repaid.
Perhaps the peculiar German disciplined race could endure this kind of ordeal --- it might be thought perverse to the point of masochism.
Politics aside, if Germany can, so can China.
Or so must China.
China’s reward will be gaining world market share, enjoying faster productivity growth, raising long-term income growth, becoming a de facto superpower, …
(‘The Bill from the China Shop’)
China’s fixed-asset-investment binge (helped by the overvalued yuan which sucks in more capital inflows that worsens both the speculative bubbles in the property market and unproductive investment by China’s local governments and SOEs) causes excess capacities, poor capital returns, heavy and unsustainably rising bad-debt loads, and shaky banking system.
(‘Beijing’s taper challenge’, Craig Stephen)
China can physically raise production, but that will sustain growth only if China can sell the extra products.
And if she can't sell them abroad, then it can grow only by selling more at home.
Hence China’s rebalancing need to a domestic consumption-driven economy.

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