News / Asia

    China’s Next Leaders Inherit Economy at Critical Crossroad

    A man walks past portrait of communist party members on display outside Imperial Ancestral Temple in Beijing, China, November 12, 2012.
    A man walks past portrait of communist party members on display outside Imperial Ancestral Temple in Beijing, China, November 12, 2012.
    China's leaders have renewed pledges to boost the economy over the next 10 years during meetings this week in Beijing. But the economic challenges China's incoming leaders face are much more difficult than the challenges their predecessors faced a decade ago.

    China’s aspirations for its economy over the next decade have come up repeatedly at the National Party Congress, in discussions on the sidelines of the meeting and in state media’s coverage of the event. It also figured prominently in the opening speech of outgoing President Hu Jintao.

    In his address, Hu mentioned the economy 104 times in a wide range of contexts.  Economic development was mentioned more than a dozen times, as was former Chinese leader Deng Xiaoping’s catchphrase "gaige kaifang," or, "reform and opening up."

    And while the risks China’s economy is facing were not mentioned as much, they were not ignored. Hu’s most direct comment on the challenges the country faces came when he said the opportunities and risks China face are not like anything before.

    This year China’s economy is slowing to its slowest growth rate in more than a decade. And although the projected year-on-year growth rate of around 7.5 percent remains enviable to many countries, that is nearly half of what it was just five years ago.

    Zhang Ping, head of China’s National Development and Reform Commission voiced confidence that the economy was improving, despite the slowdown. But he acknowledged there are still contradictions that need to be addressed.

    Zhang says that China still lacks a balanced, coordinated and sustainable development, and its growth model is very crude. He says that along with the weakening overseas demand, China still has excessive production capacity in several sectors.

    "We still lack a balanced, coordinated and sustainable development, and our growth model is still very crude. And along with the weakening overseas market demand, we still have an excessive production capacity in several sectors," he said. "There are also structural problems that need to be adjusted. It will take some time to solve these problems. These contradictions are having some impact on the development of domestic economy."

    China’s economic growth model has long focused on exports. Now, its leaders are trying to move away from that to focus on boosting domestic consumption - or moving toward an economy where domestic consumers lead the way. Unlike his predecessor, that will be a key transition that China’s incoming leader Xi Jinping will oversee, says Patrick Chovanec, a Beijing-based economist.

    "And that is a difficult transition for any economy. But particularly one as large as China and he’s [Xi Jinping] going to be tackling that challenge. It’s a challenge that people have been talking about for the past couple of years, but very little progress has been made in actually making that adjustment and he’s going to have to tackle that at a time when that is going to translate into a slowdown in the Chinese economy at least in the short run," he said.

    While there are some who point to recent economic figures such as rising factory output and consumer spending as signs of a possible recovery, others are not as optimistic. Skeptics say the slowing of lending at banks is a sign the economy may still face challenges.

    Patrick Chovanec says that as bank lending slows, investors are turning to other products such as bonds, private wealth management vehicles and trust funds.

    "There are some people who say well this is part of financial reform in China and this will all work out fine," he said. "I am more skeptical and to me what it signifies is that more and more of the funding for China’s investment led growth is being shifted away from relatively low cost low interest bank loans to alternative investment vehicles that are promising higher and higher returns on the same assets."

    There is also the problem of so-called "bad debt" such as defaulted loans written off by creditors as a loss. Chinese banking officials have acknowledged that bad debt is rising, but they insist the situation is under control. Shang Fulin, chairman of the China Banking Regulatory Commission spoke at a news conference in Beijing this week.

    Shang says bad loans have been on a rise this year mostly due to the difficulties in management of some industries. He says, however, that the overall quality of bank assets is stable and the risk is still under control. Shang says that with China’s bad loan ratio still below one percent, the country's bad loans are still far lower than the world’s major banks.

    You May Like

    Self-doubt, Cultural Barriers Hinder Cambodian Women in Tech

    Longtime Cambodian tech observer Sok Sikieng says that although more women have joined profession in recent years, there remain significant factors hindering women from reaching tech potential

    Trans-Adriatic Pipeline to Boost European Energy Security

    $4.5 billion-pipeline will become operational in 2020 and will deliver gas from Azerbaijan’s Shah Deniz II field to southern Italy

    Video California Celebration Showcases Local Wines, Balloons

    Annual festival showcases the region's harvested agriculture, fine wines and offers opportunities to experience the gentle breeze in a hot air balloon flight

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora