Perry Wong

Opinion | Amid trade tensions and slowing growth, will China’s economic reforms succeed? Look to its central and central-western regions for the answer

The once-neglected central and central-western regions of China are experiencing a resurgence as industry and services flee the high costs of the big east coast cities

The success of these cities has only grown more important as the trade war makes domestic consumption critical

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Perry Wong

Published: 11:00am, 23 Oct 2019Updated: 11:15am, 23 Oct 2019

As the US-China trade war grinds into a 15-month saga and the global economy flashes red warning signs, China’s economic growth has slowed to a new low of 6 per cent in the third quarter. This is a rate not seen since 1992, when paramount leader Deng Xiaoping called for deepening reform of the Chinese economy in Shenzhen. The economy opened up to the world and steamed ahead, posting two decades of prosperity.

Since then, the economy has weakened, in part because of the government’s supply-side reform and deleveraging in the past few years, and in part because of the prolonged trade war with the United States. The growth rate, though still respectable, appears below the consensus rate of 6.1-6.2 per cent.

Negative sentiment and pessimism could drag the growth rate down further in the remaining quarter if the trade dispute and geopolitical tensions cannot be effectively resolved.

China’s leadership has ambitiously committed to a broad reform agenda. A more transparent financial system that is open to foreign investors, along with incentives for innovation in the domestic economy, aim to leverage China’s substantial savings to stimulate domestic consumption and the service economy.

Those steps may help mitigate the economic difficulties the nation faces. The fact is that the world’s second-largest economy is still dependent on the US economy.

Will a robust domestic consumption market save the day? Can improved investment fundamentals charm more foreign investors into bringing the domestic capital market back to life? It is too early to tell. However, the economies of various regions in China are showing sign of progress and the landscape of growth is reorienting somewhat from the export-driven days.

Opinion | Amid trade tensions and slowing growth, will China’s economic reforms succeed? Look to its central and central-western regions for the answer

The once-neglected central and central-western regions of China are experiencing a resurgence as industry and services flee the high costs of the big east coast cities The success of these cities has only grown more important as the trade war makes domestic consumption critical

The once-neglected central and central-western regions of China are experiencing a resurgence as industry and services flee the high costs of the big east coast cities

The success of these cities has only grown more important as the trade war makes domestic consumption critical