China’s spectacular rise thus far is based on two pillars of exports and infrastructure. There is a realisation now that this has led to what was called “unbalanced and inadequate growth” when the new principal contradiction was declared during the 19th Party Congress in 2017. Recently, exports have slowed down and are not as profitable as before. The infrastructure sector, on the other hand, is at the centre of the guanxi (social network) induced corruption and cronyism, and is adding to the country’s debt problem. China’s President Xi Jinping has spoken of a need for course correction right since 2012, primarily to avoid a heating of the economy; expensive houses would make the middle class angry and it may have cascading implications for the party’s credibility. (Read More)
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