Understanding China, One Blog at a Time

An American in China

On How the Chinese Economy is Built

Posted by w_thames_the_d on July 7, 2013

Great piece here


Slower GDP growth undermines elite unity according to a different political dynamic. The current Chinese system is a gigantic rent-distributing mechanism. The ruling elites have learned to live with each other not through shared beliefs, values, or rules, but by carving up the spoils of economic development. In a high-growth environment, each group or individual could count on getting a lucrative contract or project. When growth falters, the food fight among party members will become vicious.

CommentsView/Create comment on this paragraphThe people who should be most concerned with financial deleveraging and slower growth are President and CCP General Secretary Xi Jinping and Prime Minister Li Keqiang. If the deleveraging process is quick and orderly, they will emerge stronger in time for their reappointment in 2017 (the Chinese political calendar thus dictates that they turn the economy around by the first half of that year).

Read more at http://www.project-syndicate.org/commentary/the-impact-of-slow-gdp-growth-on-chinese-politics-by-minxin-pei#8QlRZHBkjVOkyGqX.99

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