A new word invented to describe China's economic reforms: 'Likonomics'
'Likonomics' refers to the plans of Premier Li Keqiang to avoid government stimuli, lower credit, and initialise structural change
Last century, Margaret Thatcher gave the world ‘Thatcherism’ and her counterpart – and good friend – across the Atlantic brought us ‘Reaganomics’.
More recently, Japanese Prime Minister Shinzo Abe’s policies to revive the economy after two decades of stagnation inspired ‘Abenomics’ and now Chinese Premier Li Keqiang has stepped up with ‘Likonomics’.
The origins of the term – and the correct spelling – are vague, but Richard Harris, CEO of Hong Kong-based Port Shelter Investment Management originally referred to 'Lionomics' in March. Post columnist Tom Holland also referred to ‘Liconomics’ last week, and a few days later Barclays Capital produced its own version, spelled 'Likonomics'.
Three Barclays Capital economists wrote that Likonomics was “exactly what China needs to put its economy on a sustainable path, which we estimate is around 6 per cent to 8 per cent annual growth for the next 10 years”.
Thatcherism aimed at lowering inflation, reducing the size of government, and privatisation, freeing up markets, particularly the labour market. Ronald Reagan aimed to slow the growth of government spending, cut taxes, slash red tape and control the money supply.
They stand in stark contrast to the policies espoused by Japan’s Abe, who wants to lift inflation to at least two per cent, weaken the yen and print money and boost public investment.