China’s National People’s Congress opened today with a speech by Premier Wen Jiabao.
While these presentations are usually quite unrevealing and perhaps a bit propagandist, some interesting things were said. There will be a continued push to stimulate the economy including a € 0.5 trillion investment package. But part of the bdget includes an increase of 14% in military spending. These both aim to achieve social stability – by creating jobs and ensuring that there is the control to manage unrest if things get bad.
There were also statements made about allowing inefficient businesses to fail, about reducing the country’s reliance on low-cost manufacturing of the basics, and about wanting to stimulate consumer spending. These objectives will continue to make the Chinese economy more efficient and productive.
While China is facing difficulties, their financial condition is far stronger than that of Western economies. Their deficit is modest in comparison. And it is likely that their economy will continue to grow, albeit at a reduced rate. China remains an attractive place to invest.