Dr Andy Xie SCMP Article: Why China will focus on technology but muddle through on policy at NPC meeting

Dr Andy Xie

In a recent SCMP article, Dr Andy Xie shared his insights on the upcoming NPC meeting. He foresees the policymakers focusing on tech developments and attempts to make domestic firms the core of supply chain

Some quotes:

“China has taken the easy path in its development. There are four pieces to China’s growth story. The government used the socialist part – state-owned enterprises and planning agencies – to develop infrastructure. The Taiwanese outsourcing model was used to develop exports, earn foreign exchange and create jobs. Foreign joint ventures were used to develop technology and the domestic economy, and the Hong Kong land model was adopted to enrich the government and elites.

These short-cut approaches left behind vulnerabilities that the US is using to slow or even reverse China’s economic progress.”

No big country rises without a big struggle. China was extraordinarily lucky in the 1990s and 2000s. It made expedient choices because it could. Now it has to make hard choices, and one wrong move could spell calamity. It is overallocating capital for technological development, but that is the right decision, as some waste is justifiable.

The key is for local companies to achieve scale. Companies with scale can innovate and advance the frontier. The Chinese government appears to be relying on the domestic market and nurturing private enterprises as much as possible, similar to what Japan and South Korea have done.

Printing money to start or sustain a party is no longer on the cards. A bad stock or property market doesn’t move the policy needle like before. Anyone expecting Beijing to turn on the monetary spigot is likely to be disappointed again.

Andy XieDr Andy Xie 謝國忠 is a renowned Chinese economist based in Shanghai who has been named one of the “50 Most Influential Persons in Finance” by Bloomberg.

Andy Xie’s skill and has been tried and tested through the years. He is one of the few economists who has accurately predicted economic bubbles including the 1997 Asian Financial Crisis and the more recent subprime meltdown in the United States.

He joined Morgan Stanley in 1997 and was Managing Director and Head of the firm’s Asia/Pacific economics team until 2006. Before that, Andy spent two years with Macquarie Bank in Singapore an associate director in corporate finance and  five years as an economist with the World Bank. Dr Andy Xie is currently a director of Rosetta Stone Advisors.

Dr Xie earned a PhD in economics in 1990 and an MS in civil engineering in 1987 from the Massachusetts Institute of Technology.

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