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Crossover: What is "Likenomics"?

03-05-2014 20:47 BJT Special Report: 2014 NPC & CPPCC Sessions |

Q: As the world’s second largest economy, China’s economic stats garner a lot of attention around the globe. Pundits are now suggesting China’s economy may take over the top one spot in just a few years. Now joining me in the studio is my colleague Wu Haojun, who will help us look over some of the stats showing how China remains a global leader in economic growth. Hello, Haojun. When we talk about the Chinese economy, we have to talk about an emerging new phrase that’s been dubbed, “Likenomics”, which characterizes the economic policies of Premier Li Keqiang. But just what exactly does Li-ke-nomics entail?

A: Well, defining Likenomics is a challenge, but the three pillars of Premier Li’s economic policies are straightforward: no stimulus, de-leveraging and structural reform. Let’s first look back to the 4 trillion yuan stimulus package introduced in 2008 at the height of the global financial crisis. It propped up the economy during hard times, but some say it also caused massive overcapacity in certain areas causing significant fiscal risks and a whole array of other problems. Now on de-leveraging, official statistics put China’s total social debt at just over 111 trillion yuan in early 2013. That 15-digit number isn’t easy to grasp so let’s put it this way: it’s like each of China’s 1.3 billion people owe 86,000 yuan and many economists say it’s time to tighten the belt. And finally on structural reform since taking office, Premier Li has been saying that deepening reforms are likely to pay the biggest policy dividends for the Chinese economy. In a nutshell, the gist of Li-ke-nomics can be characterized as trading short-term pain for long-term gain.

Q: "No pain no gain" as they say. Now, to put things into perspective for us, how do the economic targets set forward for this year compare with last year?

A: Certainly, we've already gone over the big numbers such as GDP, CPI and unemployment. So here let me start with a more detailed look. China plans to run a budget deficit of 1.35 trillion yuan this year. That amounts to 2.1% of GDP, as the government continues to implement a “proactive” fiscal policy. Turning to foreign trade, the country, which last year overtook the US as the world’s largest goods trading nation, lowered its target for export and import growth to 7.5%, below the 7.9% growth it saw last year. That’s as fears still linger over another bad year for global trade. But some good news domestically, more subsidies for basic medical insurance for rural and unemployed urban residents and bigger plans for government-subsidized housing, 7 million more units expected in 2014.


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