China’s president, Xi Jinping Photo: Ahmed Omar / AP
This week, Reuters reported that rating agency Moody’s lowered China’s credit rating to negative from stable. The background is that the country last year went through an economic austerity program that was the worst in a quarter century.
The stock markets in Shenzhen and Shanghai, which admittedly was heavily overvalued, plummeted and the investments in property sector and infrastructure slowed. This in turn led to overcapacity in the steel, cement and coal and a reduction in demand for iron ore. Commodity prices in the world fell and the Chinese imports decreased. Add to that a mountain of debt that is no longer just affects growth positively – which, according to The Economist, the day is at least 240 percent of GDP, so the slowdown is a fact.
After 3000 delegates, mostly men in middle age, meet at the annual National people’s Congress (NPC) in Beijing is the economy more important than ever. It is because it is well known that according to the Chinese model of explanation is a strong correlation between economic growth and social stability. And where incomes are still means to quell social unrest.
The new the economy should therefore greater private consumption and service oriented sector will increase. 2015 represented sector 50 percent of GDP, an increase of six percent since 2010. One of the 13th five-year plan’s main objective is to continue the development and at the same time ensuring that millions of industrial workers in the new economy are losing jobs get new service oriented such . It is no small challenge.
– For that reason, this five-year plan compared with previous plans a greater focus on softer values, improving social security, education and further reforms of the financial system, says Kristina Sandklef, China Connoisseurs following Congress, said.
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