Analyses & Alternatives (분석과 대안)

Korea Consensus Institute(KCI) (사단법인 코리아컨센서스연구원)
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A New Phase of China's Development Against the Background of "Trade War" with the US: View from Russia

Вступление Китая в новую фазу развития на фоне "торговой войны" с США: взгляд из России

  • Lukonin, Sergey (Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences) ;
  • Ignatev, Sergei (Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences)
  • Received : 2018.08.13
  • Accepted : 2018.08.20
  • Published : 2018.09.30
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Abstract

By the middle of 2018 there are signs of China's entry into a new period of development, characterized by a change in the old model: "market reforms-inner-party democratization - moderate foreign policy" to another: "market reforms - Xi Jinping personality cult - offensive foreign policy." This model contains the risks of arising of the contradiction between economic freedom and political-ideological rigidity which can lead to destabilization of the political life. However, in the current positive economic dynamics, these risks may come out, rather, in the medium and long term. Today, the political situation in China remains stable - despite growing dissatisfaction in scientific expert and educational circles due to increased control over the intellectual sphere by the authorities. The need for a new redistribution of power between central and provincial authorities could potentially disrupt political stability in the medium term, but, at the moment, is not a critical negative factor. The economic situation is positive-stable. Forecasts indicate a possible increase in China's GDP in 2018 at 6.5%. At the same time, there are negative expectations in connection with the Sino-US and potentially Sino-European "trade war". In the Chinese foreign policy, as a response to Western pressure, China increasingly uses the Russian direction of its diplomacy in the expanded version of Russia + SCO. The nuance here is seen in China's adjusted approach to the SCO: first of all, not as a mechanism for cooperation with Russia, but as an organization that allows using Russia's potential for pressure on the US in the Sino-US strategic rivalry. In the second half of 2018, the Chinese economy will continue to develop steadily, albeit with unresolved traditional problems (debts of provinces and state-owned enterprises, ineffective state sector, risks on the financial and real estate market). In politics, discontent with the cult of Xi will accumulate, but without real threats to its power. Weakening in economic opposition between China and the United States is possible due to Beijing's search for compromises on tariffs, intellectual property, trade deficit. To find such trade-offs, Xi will use the so-called. "Personal diplomacy" of direct contacts with Trump.

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