The following is an abridged translation of a recent lecture given by Chinese economics professor Xu Xiaonian.
With China’s economic slowdown, Chinese leaders have come up with a new slogan, the “New Norm.” People have different takes on the meaning of this “new norm.” My understanding is this: first, the government no longer sets up a target of high economic growth; second, the government no longer uses expansionary fiscal and monetary policies to maintain certain growth targets; third, (dividends) growth is realized through reform.
I think the above three points are correct. Problems arise from the resurgence of old thinking in the “new norm” when economic figures continue to remain lower than we expect. The old thinking focused on banks relaxing lending and on government to increase spending on both domestic and foreign investment, etc. The old practices of the past dozen years did not solve the problems of the past and neither can they solve the problems of the future.
Stock Market Elation
If printing money cannot maintain growth, will issuing stocks be able to guarantee growth? We Chinese are now caught in a state of elation. There is no use to talk to anyone, as everyone is thinking about how much stocks have gone up each day. It is like being at a happy feast. The noise of the feast covers up the fundamental issue. Perhaps after the bubble has burst, we can talk about innovation. Right now, no one is in the mood to talk about innovation.
