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Opinion
Why China’s GDP growth needs to be read against its social contract
- Economic development and sustainability are both part of the contract and one cannot come at the expense of the other
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Lub Bun Chong is a partner of C Consultancy and Helios Strategic Advisors, and the author of “Managing a Chinese Partner: Insights From Four Global Companies”.
China concluded its third plenum last month, which came off the back of lower-than-expected second-quarter GDP growth of 4.7 per cent. The outcome of the plenary session was a disappointment, once again, for Western analysts who seem bent on pressing China for more stimulus to boost its gross domestic product.
Economic development is a tenet of China’s social contract. President Xi Jinping warned, in his new year speech, that “some enterprises had a tough time”, and “some people had difficulty finding jobs and meeting basic needs”.
The magnitude of China’s economic slowdown is not lost on its leadership. But sustainability is also a tenet of the social contract, and economic growth should not be achieved to the detriment of sustainability – this, too, is not lost on China’s leadership.
China cannot claim to support globalisation yet brush aside the concerns of Western analysts. So its policy agenda is a delicate juggling act of Western concerns and its social contract. A case in point: it announced US$42 billion of stimulus for consumption, but not before earmarking US$139 billion for public projects.
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