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Unraveling the Dead-end Cycle

Apr 11-2019   



China is well on its way to becoming a strong modernized nation by 2035 and a high-income country by 2050 – on a par with OECD countries; yet challenges remain as to whether modernization will be completed in ideology, state governance and social governance, and whether the process will be a mild one, said NSD Dean and Professor Yao Yang in an interview with leading Chinese news portal ThePaper. Besides China’s modernization path, he also touches on other key issues such as wealth gap and structural reforms. While praising the accomplishments in rural areas, he worries about the potentially sweeping impact of robots on jobs and feels that the government hasn’t paid enough attention to this challenge. “In 10-20 years, unemployment will be a big issue,” he says. Possible solutions to rural issues include loosening up the Residence Permit System to allow farmers to live and work in cities, and gathering farmers from hollowed-out villages to live in small towns with access to modern facilities. Regarding structural reforms, he points to the need of SOE reforms in the direction of mixed ownership, and the imperative to regulate local government financing and subject it to market pricing. “Only two kinds of financing should be allowed: treasury bonds and market-based bonds issuing. Any other financing methods must be banned so as to avoid the dead-end cycle,” he says. 

Unraveling the Dead-end Cycle

Apr 11-2019   



China is well on its way to becoming a strong modernized nation by 2035 and a high-income country by 2050 – on a par with OECD countries; yet challenges remain as to whether modernization will be completed in ideology, state governance and social governance, and whether the process will be a mild one, said NSD Dean and Professor Yao Yang in an interview with leading Chinese news portal ThePaper. Besides China’s modernization path, he also touches on other key issues such as wealth gap and structural reforms. While praising the accomplishments in rural areas, he worries about the potentially sweeping impact of robots on jobs and feels that the government hasn’t paid enough attention to this challenge. “In 10-20 years, unemployment will be a big issue,” he says. Possible solutions to rural issues include loosening up the Residence Permit System to allow farmers to live and work in cities, and gathering farmers from hollowed-out villages to live in small towns with access to modern facilities. Regarding structural reforms, he points to the need of SOE reforms in the direction of mixed ownership, and the imperative to regulate local government financing and subject it to market pricing. “Only two kinds of financing should be allowed: treasury bonds and market-based bonds issuing. Any other financing methods must be banned so as to avoid the dead-end cycle,” he says.