The situation of the Chinese economy

The beginning of the Chinese Communist Party Congress, where Xi Jinping's leadership must be reaffirmed, does not coincide with comforting data for the country's economy. The issue is central to Beijing's political programs: the objective of maintaining a high level of growth is considered a priority to allow the country to play the role of great economic power that the Chinese government wants to pursue. Up to 2020 the average targets were about a 6.5% annual growth rate, currently the official figures show a growth of less than half a percentage point, but this estimate would have been built upwards, artificially, to avoid presenting to the financial world too compressed data. In reality it seems that there are studies with real values ​​even much less than 6% official. The deterioration of the data should take into account a structural factor of the Chinese economy, due to the indebtedness of the peripheral administrations, which is not counted in that of the central administration and whose amount is not known. However, this data, in previous years, was masked by high growth rates, which were not influenced by endogenous factors that are now decisive. The main of these factors was the election of Trump in the White House and its economic policy, focused on the commercial war declared against Beijing. One of the responsibilities of Chinese rulers is to have underestimated the effects of the introduction of tariffs on goods to the United States, which are among the real ones responsible for the decrease in growth. It should be remembered that China has also neglected the internal market and its growth for too long, with policies aimed more towards increasing trade with foreign countries. Large investments in foreign countries, acquisitions and participation in foreign companies and large infrastructure spending, such as those incurred for the Silk Road or in African countries, have committed great liquidity aimed at long-term projects, but which have diverted resources for the internal market. The attention on this side has now become an obligation and the Chinese government is about to launch tax incentives for companies and, above all, to encourage domestic consumption. In order to stimulate domestic consumption, Beijing relies on a series of public works in the railway sector and the growth of military spending with orders to Chinese companies, spending on the armed forces serves to bridge the difference between commercial power and military power of the Chinese nation, a mandatory condition to exercise the role of superpower on a par with the USA. Significant investments are also planned for the telecommunications sector, where the infrastructure for the 5G standard is considered a priority by the National People's Congress. But internal development is not just an economic priority, the condition of Chinese workers has caused several strikes that, despite the repressions made by the regime, threaten social stability; until now the greatest antidote to discontent has been the promise of an increase in the quality of life of the Chinese people and now this goal is no longer postponed and can only be pursued with a greater possibility of per capita spending for workers and families . Within this internal market policy there is a willingness to allow 10 million Chinese people to leave poverty. This value can be achieved with the reduction of unemployment, but also with the search for greater stability in the condition of workers, up to now too subject to market trends. However, there is a contradiction in the policies announced: if, on the one hand, there are strong tax cuts, including the decrease in value added tax, on the monetary policy side a reduction of public spending is expected, which will have to be interpreted the implementation: in fact if the reduction of expenses will have to concern activities of support to the population, the phenomenon of poverty will be difficult to reduce, vice versa if you want to work on aspects such as the functioning of the bureaucracy and corruption, these measures can contribute to the gain of points percentages of the gross domestic product, given the important weight they have on the economy of the country.