Xi Jinping seeks “high quality” rather than “high speed” growth, he told the Chinese Communist Party’s Third Plenum, held last week to decide the country’s economic policy over the next five years. Some observers say this is simply rationalizing the Chinese economy’s problems—enormous government and corporate debt, an inflated property sector, and disappointing growth in private and household consumption—which have gotten worse under Mr. Xi’s watch. Others counter that Mr. Xi is doing the right thing by focusing on high-tech sectors such as semiconductors, artificial intelligence, aeronautics and renewables to underpin a high-quality growth model.
Perhaps Mr. Xi is trying to make a virtue out of necessity. Up to now, China has relied on a “high debt, high leverage, high turnover” model that created rapid growth based on enormous levels of fixed investment in infrastructure and housing. That system is flaming out. But rather than adroitly managing an intentional slowdown to usher in a new era of sustainable growth, Mr. Xi is presiding over the next phase of Chinese economic waste, market distortion and failure.
Read the full article in the Wall Street Journal.
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