Xi’s challenge is to drive consumption

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fe Bureau: New Delhi, Nov 15 2012, 03:53 IST

Tags: Xi Jinping | Communist Party Of China | GDP Growth

The change in Chinese leadership and its implications for the global economy will be closely monitored by the rest of the world simply because China is expected to produce incremental growth of about 7% to 7.5% average on its $6-trillion GDP base at present. That will be more than the troubled economies of US and EU together will produce incrementally in the years ahead. That tells you of the continuing importance of China in aiding world growth.

The new President, Xi Jinping, will most likely continue on the reformist path like his predecessor Hu Jintao who, even while stepping down, has set a new economic target for China — that of doubling GDP per capita growth for both rural and urban China from 2010 to 2020. So, Xi Jinping will pursue this target vigorously. To achieve this GDP per capita target by 2020, China will have to grow its GDP by at least 7.5% a year. There will be continuity in this respect as the Communist Party of China knows only too well that the world is in awe of that nation because it has shown stupendous growth over the past 20 years and lifted over 400 million people out of poverty. That, the party bosses well realise, has been their biggest currency of power.

Xi Jinping will therefore continue with new reforms to raise productivity. He may adopt a nuanced shift in strategy by seeking to drive a predominantly consumption-led growth over the next decade.

This strategy has been articulated

... contd.

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