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Title:
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China’s slowdown and Philippine growth (Part II)
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Author:
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Bernardo M. Villegas
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Source:
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Manila Bulletin
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Date:
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June 26, 2016
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Description:
- Another view that supports that China will not have a hard landing is presented by John Ross, senior fellow at Renmin University of China. He points out that the hard landings in recent times of the US (after 2007), Japan (after 1990) and Russia (after the introduction of capitalism in 1999) were driven by precipitous declines in investments. These investments were predominantly from the private sector. In China, the state sector remains the dominant player, despite diverse forms of ownership. The key role of the State was reaffirmed at the Third Plenum in 2013 and reiterated by Xi Jingping in 2016, while also emphasizing the side-by-side growth of the private sector. According to Mr. Ross, the state sector can be used by the government to raise investment to prevent a recession, and its dominant role does not arise from it being a majority of the economy. Rather this ability to manage the business cycle stems from its being large enough to impact investment and therefore GDP growth. For these reasons, it is highly probable thatChina will avoid a hard landing in the next five years or so.
