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Xi Jinping’s “New Normal”: Quo Vadis?

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A Publisher's Erratum to this article was published on 24 June 2017

This article has been updated

Abstract

Xi Jinping, the most powerful new leader of China since Deng Xiaoping, has proceeded with a new agenda of economic reform, deleveraging, and the rectification of corruption; at the same time he has been intent upon sustaining high growth. This he calls China’s “new normal.” Beginning with an analysis of the old normal, we analyze the political economy of Xi’s multifaceted approach and its contradictory consequences.

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  • 24 June 2017

    An erratum to this article has been published.

Notes

  1. At the time Hu Jintao and Wen Jiabao came to power in 2003 China had sustained economic growth averaging 9.6% per annum for the previous 24 years, but Chinese GDP growth then accelerated, averaging 10.4% per annum for the next decade. [7].

  2. Chinese budget revenues as a percent of GDP increased from 10.8% in 1995 (US$113 billion) to 22.6% in 2012 (US$1.86 trillion) [23: 14–25].

  3. The 514 billion yuan [US$82.52 billion] spent on stability maintenance in 2009 was close to the 532.1 billion yuan [US$85.43 billion] in military expenditures that year. The 624.421 billion yuan [ca. $100.25 billion] for stability maintenance in 2011 surpassed the military budget of 601.1 billion yuan [US$96.51 billion] the same year, and has surpassed it ever since.

  4. The 2003 critique by Larry Xian-ping Lang [8], a finance professor at Chinese University of Hong Kong, brought the MBO issue into the critical spotlight.

  5. “The State should solely own, or have a majority share in, enterprises engaged in power generation and distribution, oil, petrochemicals and natural gas, telecom and armaments. The State must also have a controlling stake in the coal, aviation, and shipping industries” [32].

  6. Between 2003 and 2007, the average annual growth rate of real estate investment was over 25%.

  7. The 2014 ranking of countries by the Corruption Perceptions Index actually ranked China lower than a year before, falling from 80th to 100th place [10]. Such statistics may however be premature and misleading; if corruption is measured in terms of convictions, the impact of a crackdown would be an perceived increase in corruption.

  8. In 2012, Chinese citizens comprised 1675 of the 10,000 annual quota of EB-5 visas allotted by the US State Department (contingent upon making a US$1 million investment providing jobs for 10 people). In 2014, that number rose to 8308.

  9. Text in http://news.xinhuanet.com/politics/2013-02/05/c_114625358_2.htm, as cited in [29]

  10. China launched a large infrastructure investment plan in 2015 for altogether 323 infrastructure projects (high-speed railways, airports, highways, etc), including 131 in 2016, 92 in 2017, and 80 in 2018. Though unnoticed by the media, 2015 qualifies as a third fiscal stimulus, following 2009 (the biggest) and 2012.

  11. China is clinging to low-cost manufacturing, even as it goes upmarket to exploit higher-value activities. Its share of global clothing exports has actually risen, from 42.6% in 2011 to 43.1% in 2013. It is also making more of the things that go into its goods. The World Bank has found that the share of imported components in China’s total exports has fallen from a peak of 60% in the mid-1990s to around 35% today

  12. Average return on assets for state companies was at about 4.6% in 2014, compared with 9.1% for private businesses [2].

  13. Some sectors—e.g., the internet connection industry, the airline industry, financial services—have been more open to private competition, usually at the lower end (e.g., low-cost short-route airline carriers). CITIC received major equity investment from private sources: two foreign companies have acquired around 20% of voting rights, making CITIC a trailblazer in the mixed ownership system [21].

  14. There are more than a hundred private banks in China, but the others receive equity investments from SOEs.

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Correspondence to Lowell Dittmer.

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The original version of this article was revised due to an incorrect title. The mistake was made at the Publisher’s end.

An erratum to this article is available at https://doi.org/10.1007/s11366-017-9500-0.

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Dittmer, L. Xi Jinping’s “New Normal”: Quo Vadis?. J OF CHIN POLIT SCI 22, 429–446 (2017). https://doi.org/10.1007/s11366-017-9489-4

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