Monday, September 20, 2004
A reporter asked me what impact Jiang's resignation will have on China's macroeconomic policies. Below are my responses:
On whether Jiang's departure will have an impact on macroeconomic policy. In the short-run, it probably won't have much of an impact. The soft-landing is proceeding as planned, and I don't think anyone wants to upset that. There will perhaps be less pressure to lower interest rate and increase money supply.
In the medium run, a lot depends on whether Huang Ju, a Jiang follower, will continue to have control over the financial portfolio. It is pretty clear that the recent promotion of Huang Qifan to the CSRC is orchestrated by Huang Ju, since Huang Qifan was a key economic official under Huang Ju. Huang's continual role in the financial sector will bring policy advantages to the Jiangnan region. If Huang Ju is given a less power portfolio in the future, I think financial policies will be more regionally balanced, which is what Hu and Wen prefer.
Looking past the 17th Party Congress, if Hu is able to consolidate power without too much intervention by the Jiang hold-overs, I forsee a gradual split between Hu and Wen. According to the logic of my dissertation, Hu will acquire more and more followers in the provinces, while Wen will consolidate his control in the State Council. If that were the case, Hu will over time prefer a more decentralized mode of economic control, in conflict with Wen's tendency to centralize. But of course, this part is highly speculative.
On whether Jiang's departure will have an impact on macroeconomic policy. In the short-run, it probably won't have much of an impact. The soft-landing is proceeding as planned, and I don't think anyone wants to upset that. There will perhaps be less pressure to lower interest rate and increase money supply.
In the medium run, a lot depends on whether Huang Ju, a Jiang follower, will continue to have control over the financial portfolio. It is pretty clear that the recent promotion of Huang Qifan to the CSRC is orchestrated by Huang Ju, since Huang Qifan was a key economic official under Huang Ju. Huang's continual role in the financial sector will bring policy advantages to the Jiangnan region. If Huang Ju is given a less power portfolio in the future, I think financial policies will be more regionally balanced, which is what Hu and Wen prefer.
Looking past the 17th Party Congress, if Hu is able to consolidate power without too much intervention by the Jiang hold-overs, I forsee a gradual split between Hu and Wen. According to the logic of my dissertation, Hu will acquire more and more followers in the provinces, while Wen will consolidate his control in the State Council. If that were the case, Hu will over time prefer a more decentralized mode of economic control, in conflict with Wen's tendency to centralize. But of course, this part is highly speculative.
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