“China Will Grow through Infrastructure & Silk Road”

Leading Chinese economists presented China’s revised economic policy to an unusual all-day meeting of the National Committee on U.S.-China Relations in New York City on Jan. 7. EIR correspondent William Jones reported from the meeting that despite frankly discussing the problems facing China confronting economic collapse in some important parts of the world, the economists were quite confident. China has continued to grow its economy at 8-9% annual rates for six years while the entire trans-Atlantic world was wallowing in collapse.  “China will maintain a 7-8% growth,” former World Bank vice president Justin Lin said.

China has confronted, first, the descent of some of its leading export markets into long-term economic recession. And secondly, the need to control credit bubbles in China’s real estate and commodities sectors which have blown up during the extraordinary growth of the past decade.

How have they blown up? Within days after the economists spoke, a major real estate bankruptcy took place Jan. 12, of the Shenzhen-based Kaisa Group, defaulting on $500 million in debt. The debtors were a dozen Wall Street-London financial firms — featuring Black Rock Financial, Standard and Chartered Bank, Fidelity Investments, and Lion Global Investors, as the Wall Street Journal reported in “Kaisa Group Defaults on Offshore Debt” earlier this week. This “offshore debt” is endemic in the real estate and commodities bubbles.

Overcoming these problems, Lin said,

“We have to improve labor productivity. And this will require continued investment.”

He also indicated that there is a continued transition relocating labor-intensive industries to other Asian countries and replacing them with higher value production.

This strategy has been successfully implemented in the rapid development of China’s high-speed rail systems, on which investment is huge: Five such new inter-city lines have opened within the past month.

 The second method stressed was what the world now knows as the two Silk Roads and the Asian Infrastructure Investment Bank — also called in China “going abroad,” with high-speed railroads also quickly becoming the hallmark of Chinese high-tech export. Qin Xiao, chairman of the Boyuan Foundation, said China’s plan is investing $350 billion outside China in the next decade in manufacturing and infrastructure alone.

The article, “One Belt, One Road at the Center of China’s Reform Program” will give a full report in this week’s EIR.