Q. What are major threats to China's economy and their potential impact on China's political stability?
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Replied by Dr Teshu Singh

In January 2018, Liu He (Vice Premier of China) while speaking at the World Economic Forum had mentioned about the ‘Three Critical Battles’. They are; preventing and resolving the major risks, conducting targeted poverty reduction and controlling pollution. The other threats to the Chinese economy are a middle-income trap, declining demographic dividend, US-China trade dispute and reshaping the Chinese economy post-COVID-19.

China is the second-largest economy, the largest exporter and has the largest foreign exchange reserves in the world. In 2019, the economic growth of China has gone down, it was 6.1 per cent against 6.8 per cent in 2018. The Chinese government considers a growing economy as critical to maintaining social stability. The falling economy is a serious challenge for China. Next year, 2021, China will celebrate the centenary year of the founding of the Chinese Communist Party and a lower rate of growth will affect the image of the Chinese leadership. Xi Jinping has taken umpteen measures to ensure the upward trajectory of the economy. In his second term, he had made Liu He as the Vice Premier and the chief negotiator of the US-China trade negotiation. He is believed to be the inspiration behind China's move in economic policy, which has seen a focus on slower but more sustainable consumption-based growth, than the debt-fuelled investment and exports that have driven the country's growth over the past four decades. Further, Xi Jinping has placed financial experts in provinces to manage risks and rebuild regional economies. He has further put 12 former executives at state-run financial institutions in top posts in 31 provinces, regions and municipalities. Overall, the legitimacy of the party depends on the health of the Chinese economy.

Date : 28/04/2020
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