The ups and downs of the Chinese economy are becoming an increasingly common phenomenon. They respond to a market that is entering some sort of a “teenage” phase. The Asian giant is sometimes giving good news and sometimes bad news to a world economy that sees China as the global engine of growth. Most likely is this maturity stage what brought Richard Harris, CEO at Port Shelther Investment Management, to conclude that “China can no longer be described as emerging. It may be young, it may be growing fast, it may have an export-led economy; but it is no longer emerging.” So following his line of thought, on his recent op-ed at the South China Morning Post, Harris suggested we should all keep in mind a new term: Lionomics.
An acronym that gives name to the ambitious process of economic reform the new Chinese Prime Minister Li Keqiang must bring forward if he wants to avoid the economy getting out of control. In other words, Lionomics mainly refers to the implementation of unprecedent work aimed at revitalizing an economy that is at its lowest in 13 years. The reform of the current Chinese system should create a new economic structure able to sustain the new challenges brought about by progress. Also, it must guarantee sustainable growth in the long term. Li seems poised to launch a campaign of deregulation to bring unemployment under control, slow down the debt of local governments and ensure sustainable growth in the long term.
To accomplish such undertaking, Li Keqiang might have the support of the Chinese president, Xi Jinping. According to sources quoted by Reuters, Xi might have actively participated in the design of a new reform plan. Counting with the support of the main party leaders, Xi and Li are expected to present the new plan during the 18th meeting of the Politburo standing committee next October.
This also uncovers remarkable changes in the way politics is done in China. Now the Communist Party seems to be thinking more long term and resisting the temptation of stimulus packages. Still, these appealing rumours of macro reform fail to give clear details on how they will materialize in the population. Nonetheless, the Communist Party is aware of the critical role the population must play in this new model. Proof of that is Xi’s surprise visit to the Job Fair held in Tianjin a few weeks ago. In July more than 7 million graduates will leave campuses across China. Chronic unemployment and the instability brought by it, specially worries the Communist Party. That’s probably why Xi send job-seekers the following message: “Intelligence quotient and emotional quotient, which is more important? EQ is important for adapting to society, although it should be used together with professional knowledge and techniques.”
China will only be able to put in practice Xi’s inspiring words if it evolves into a new system that empowers people, helping them to get the most of their emotional quotient. In this sense fostering entrepreneurship and developing the services sector are two critical factors. They both can lower the risks of social instability that can be caused by a growing unemployment rate.