TikTok is looking for a solution to its struggle for survival in the United States. The entertainment platform of the Chinese group ByteDance is being criticized in Washington. And the state of Montana has also passed a law that would allow TikTok to be banned. Now, TikTok is pulling the ripcord with a novel trick, as Marcel Grzanna analyzes. As part of “Project Texas“, TikTok will, among other things, hand over core segments of its technology to the US software producer Oracle. It would be a rare compromise in the current harsh climate between the US and China.
If China’s special envoy Li Hui needed a reminder that Russia is at war in Ukraine, Moscow promptly delivered. Shortly before Li’s arrival in Kyiv, the Russian military launched a major attack with hypersonic missiles on the Ukrainian capital. President Xi Jinping’s envoy is meeting with representatives of the Ukrainian government until Wednesday to sound out solutions. What he will discuss behind closed doors remains secret for the time being, as Felix Lee writes. But a serious attempt at mediation can be expected, despite all the skepticism in the West. After all, Li is traveling from Kyiv to Warsaw, Berlin, Paris – and Moscow.
Former Cyber-criminologist Dirk Beerhenke has been waiting for this opportunity all his career. But it took until his retirement for the retired chief inspector to have his concerns heard directly by German politicians. A few weeks ago, Beerhenke was invited to the Children’s Commission of the Committee on Family Affairs in the German Bundestag. In parliament, the six-member committee represents the interests of children and young people.
Beerhenke explained the dangers of digital media for minors to the MPs. He explicitly warned against using the Chinese video platform TikTok, much like Education Minister Bettina Stark-Watzinger (FDP) recently did. “There are two reasons for my concern: data security and propaganda,” the 62-year-old told Table.Media. “When I combine my professional knowledge with the political background that prevails in China – I come to the conclusion that we should not use TikTok.”
The former investigator warns: The use of TikTok would put personal and biometric data, movement profiles and voice tones into the hands of an autocratic government. While US companies possess similar data troves, their anchoring in constitutional democracies is a control instrument that prevents simple access to this data by a government, said Beerhenke.
The debate about TikTok has been going on intensively in the United States for a long time. In mid-April, US CEO Shou Zi Chew had to appear before the US Congress. The questions concerned national security issues and TikTok’s ties to China. Shou, a native of Singapore, was unable to provide clarity. “I’ve not been reassured by anything you’ve said so far,” said US Democrat Lisa Rochester. “I think quite frankly your testimony has raised more questions for me than answers.”
The US state of Montana has already passed a law that lays the foundation for a potential TikTok ban. Although it is uncertain whether such a ban would stand in court, the possibility has been hanging over the US offshoot of ByteDance in Beijing for months.
TikTok turned over almost six billion US dollars through advertising in the United States in 2022, so it is profitable for the company. This is why TikTok is now willing to make extensive concessions to the US authorities. The operators seem willing to cede the Americans’ control of the app’s content and data. It is said TikTok would allow the authorities to set up a management team, hand over core segments of its technology to the US software producer Oracle and share the algorithms for independent review.
This plan was dubbed “Project Texas” because Oracle has its headquarters there. This was reported by the online portal Cyberscoop. The idea for Project Texas came from the platform itself. Samm Sacks of the Paul Tsai China Center at Yale Law School sees it as “a serious effort to address US government concerns.” “The US government would have the ultimate oversight and monitoring of compliance with whatever they agree to,” he told the online portal.
The US government fears that the Chinese government could exert ideological influence on the approximately 80 million US users. Because TikTok’s algorithm not only suggests content for its users based on their own preferences and those of their contacts, but also scans the entire library of uploaded videos. This allows it to suggest any content to the user. In other words, Chinese soft power. However, this control can also lead to censorship and blocked keywords.
TikTok sees itself as unjustly accused. And it now even has to defend itself against accusations from an insider. The former head of the engineering department of the US branch accuses the parent company ByteDance of serving as a “propaganda tool” for the Chinese government. For example, he accuses TikTok of inciting “hatred against Japan” and restricting content that supported pro-democracy protesters in Hong Kong. The ex-employee also stressed that Chinese authorities had access to the company’s US data.
This statement has fuelled concerns among US authorities that TikTok is providing the Chinese government with a vast trove of personal data on US citizens to feed a sophisticated surveillance system. China is using its technology to crack down on critics worldwide.
In early December, Bytedance announced gaining access to data from users in the rest of the world. TikTok defended the decision as a “proven necessity” for employees in China to do their jobs, and the transfer is in line with the European Data Protection Regulation, for example.
The catch: Chinese companies in the People’s Republic are legally obligated to cooperate with the authorities. If the authorities demand data, a company has to comply. “Even a European data protection regulation is of no use here. We are dealing with an authoritarian state that no legal situation can prevent from accessing data,” says cyber investigator Beerhenke.
With Project Texas, all processes relevant to national security in the USA could be transferred to a separate corporate entity. The new organization would be given an executive board, which would have to be approved by the investment regulator CFIUS. An American version of the app would thus be completely shielded from the Chinese owners.
No matter how much Xi Jinping and Vladimir Putin swear their mutual friendship to the outside world, Russia’s missile attacks on Kyiv early Tuesday morning probably did not win them any points in Beijing. Only a few hours before the Chinese special envoy Li Hui arrived, the Russian army fired hypersonic missiles at the Ukrainian capital. Mayor Vitali Klitschko spoke of “one of the fiercest attacks on Kyiv since the beginning of the war.”
This was an insult to Beijing. As the Chinese Foreign Ministry in Beijing announced in advance, the trip’s goal was to talk to “all parties” to seek a “political settlement” to the Ukraine conflict. With its air strikes, Moscow is now showing what Vladimir Putin thinks of China’s offer: very little. Yet the leadership in Beijing continues to emphasize that it “takes a neutral position” in the Ukraine conflict – as the Foreign Ministry in Beijing also affirmed to the international press on Tuesday. To date, China has not condemned Putin’s war of aggression on Ukraine.
So now China wants to mediate. For the time being, observers can only speculate about the nature of Li Hui’s talks in Kyiv. The Chinese Foreign Ministry said that all talks would happen behind closed doors. Li will not comment publicly on either day in Kyiv. However, after his stay in Kyiv, the special envoy will travel to Warsaw on Friday. Afterward, Li Hui plans to hold talks in Berlin and Paris. This also indicates that Beijing seems to be interested in an honest exchange with the EU states.
Nevertheless, China’s mediation efforts are viewed with skepticism in the West. And rightly so. Unlike African states, which are mainly concerned about their food imports from Ukraine, China’s strategic interests in this conflict rest much more with Russia. Moscow is a welcome partner in the common opposition to the United States. China also benefits economically, for example, from its neighbor’s cheap gas.
Due to Western sanctions, Russia is more dependent on the Chinese sales market. In turn, Chinese companies are flooding the Russian market with goods and filling the gaps left by Western companies in the wake of the sanctions. Chinese companies have come to Russia to stay.
China’s twelve-point plan for resolving the Ukraine conflict presented in February, therefore, remained vague and was essentially formulated in Russia’s favor. The paper blames NATO and the USA for escalating the conflict. It frowns on Western sanctions against Russia as a sign of a “Cold War mentality.” Xi Jinping, at least, has publicly opposed the use of nuclear weapons in the conflict several times – which is also reflected in the paper.
There are some indications that China is now more serious about mediation than in February. For example, in late April – not least at the insistence of the Europeans – Xi Jinping and Ukrainian President Volodymyr Zelenskiy spoke on the phone for the first time since the beginning of the war.
Prior to the telephone call, French President Emmanuel Macron and EU Commission President Ursula von der Leyen had urged Beijing to play a more active role in finding a peaceful solution in Ukraine during their joint visit to Beijing. The fact that China is now sending a special envoy, Li Hui, to Kyiv at all can certainly be seen as a first concession to the West. Li is considered an excellent expert on Russia and has served as ambassador to Moscow for ten years. This qualifies him as a mediator.
And it is by no means only China that has not condemned Russia’s war of aggression and is now taking action. South Africa, too, has so far refused to denounce Russia’s actions officially. South Africa also held joint naval drills in February with Russia and China.
On Tuesday, six African heads of government announced their intention to seek a peaceful solution between Russia and Ukraine – alongside South Africa, Zambia, Senegal, the Republic of Congo, Uganda and Egypt. According to South African President Cyril Ramaphoa, Putin and Zelenskiy have agreed to receive a delegation from the group in Moscow and Kyiv. So there are mediation efforts from other sides as well.
Beijing surely feels a certain satisfaction that the once superior Russia now depends on China as its junior partner. At the same time, it is in Beijing’s interest to preserve Putin as Russia’s ruler. His fall could possibly bring about a pro-Western leadership in Moscow. And then Beijing would find itself isolated. Beijing is, therefore, only likely to be interested in serious peace if it secures Putin’s power.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
According to China’s National Bureau of Statistics, the economy grew by 4.5 percent year on year in the first quarter of 2023. While that hardly matches the robust growth of the pre-pandemic period, it did exceed market expectations. And with the right policies, China can do even better
There is plenty of pessimism about China’s economic prospects nowadays, with many warning – not without reason – that China has entered a deflationary period. In the first quarter of 2023, China’s consumer price index (CPI) rose by only 1.3 percent year on year – down from 1.8 percent in the previous quarter. More striking, China’s producer price index (PPI) fell by 2.5 percent year on year in March – its sixth consecutive month of decline.
This is not a new trend. In fact, China’s PPI has been negative for the better part of the last decade. Beginning in March 2012, China’s PPI was in negative territory for 54 consecutive months. In January 2019, it turned negative again – and remained so for 17 months. While CPI has remained positive, it has grown by less than 2 percent annually, on average, for a decade.
While claims that China has entered a deflationary period are excessive, the data indicate that China’s economy continues to be hamstrung by low effective demand. Official figures also support the claim that China’s GDP growth has been below potential for some time.
This may not have been surprising when the zero-COVID policy was triggering regular lockdowns, including in economic hubs like Shanghai. But the abandonment of strict pandemic-containment policies in December was widely expected to unleash pent-up demand, leading to a robust recovery. Some even warned that inflation could spike, as supply struggled to keep up.
None of this came to pass. Non-economic factors – linked, for example, to global geopolitical tensions – bear some of the blame. But, in my view, one of the most important reasons for China’s weaker-than-expected economic performance since December is the government’s overly cautious approach to macroeconomic policy, particularly fiscal policy.
China’s government has set a growth target of “around 5 percent” for 2023. For an economy that grew by 6.7 percent, 6 percent, 2.2 percent, and 8.1 percent in 2018-21, that is simply too low. A better approach would aim for 6 percent growth – an entirely feasible target, given China’s recent performance. While the government’s reluctance to aim for a higher growth rate is understandable, a conservative target can create a self-fulfilling prophecy, by weakening confidence and failing to exploit growth potential fully.
Some policy interventions, such as cash transfers, would provide a direct and immediate boost to consumption, which accounted for 54.3 percent of GDP in 2021 and had been the main contributor to GDP growth for years before 2022. But, as China’s government well knows, consumption is a function of income; a sustained, broad-based increase in incomes depends on economic growth; and infrastructure investment is traditionally the state’s most effective instrument for boosting growth when effective demand is weak. Despite past investments, China still has a large infrastructure gap that urgently needs to be closed.
There are risks to this approach. As China learned when it implemented a 4 trillion yuan (578 billion US dollars) stimulus package during the 2008 global economic crisis, large-scale public investment in infrastructure can lead to an increase in local-government debts, ultimately undermining financial stability.
But rather than discourage state-led infrastructure investment, this experience should motivate policymakers to engage in more careful planning that avoids creating additional “white elephants.” It should also spur changes to how the government finances its investments.
China’s authorities have historically been very reluctant to run budget deficits. As a result, the vast majority of funding for past infrastructure investments has been raised by local governments on capital markets at high interest rates. Spending by the central government accounted for perhaps less than 1% of total infrastructure investment in 2021. Small wonder local governments are weighed down by debt.
For the next round of infrastructure investment, the central government should contribute a significantly larger share of funding. At the same time, it should step in to help local governments resolve their debt problems. This will require the central government both to increase its budget deficit (as a share of GDP) and to sell more government bonds to the public in 2023.
Barring a “black swan” event, China can achieve 6% GDP growth this year, thereby ending a 12-year slowdown. But this will not happen on its own. Carefully planned and prudently funded infrastructure investment, supported by expansionary fiscal policy, is essential.
Yu Yongding, a former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, served on the Monetary Policy Committee of the People’s Bank of China from 2004 to 2006.
Copyright: Project Syndicate, 2023. www.project-syndicate.org
The journey to Mars is long and perilous. China’s first rover Zhurong didn’t survive the trip – it might have been best to stay in the Gobi Desert, like its little toy friend. About 20 kilometers from Jinchang, Gansu Province, lies Mars Base 1, a nearly 70-square-kilometer survival simulation camp modeled after the red planet. Visitors can book a Mars experience here in a replica space suit. Occasional sandstorms included.
TikTok is looking for a solution to its struggle for survival in the United States. The entertainment platform of the Chinese group ByteDance is being criticized in Washington. And the state of Montana has also passed a law that would allow TikTok to be banned. Now, TikTok is pulling the ripcord with a novel trick, as Marcel Grzanna analyzes. As part of “Project Texas“, TikTok will, among other things, hand over core segments of its technology to the US software producer Oracle. It would be a rare compromise in the current harsh climate between the US and China.
If China’s special envoy Li Hui needed a reminder that Russia is at war in Ukraine, Moscow promptly delivered. Shortly before Li’s arrival in Kyiv, the Russian military launched a major attack with hypersonic missiles on the Ukrainian capital. President Xi Jinping’s envoy is meeting with representatives of the Ukrainian government until Wednesday to sound out solutions. What he will discuss behind closed doors remains secret for the time being, as Felix Lee writes. But a serious attempt at mediation can be expected, despite all the skepticism in the West. After all, Li is traveling from Kyiv to Warsaw, Berlin, Paris – and Moscow.
Former Cyber-criminologist Dirk Beerhenke has been waiting for this opportunity all his career. But it took until his retirement for the retired chief inspector to have his concerns heard directly by German politicians. A few weeks ago, Beerhenke was invited to the Children’s Commission of the Committee on Family Affairs in the German Bundestag. In parliament, the six-member committee represents the interests of children and young people.
Beerhenke explained the dangers of digital media for minors to the MPs. He explicitly warned against using the Chinese video platform TikTok, much like Education Minister Bettina Stark-Watzinger (FDP) recently did. “There are two reasons for my concern: data security and propaganda,” the 62-year-old told Table.Media. “When I combine my professional knowledge with the political background that prevails in China – I come to the conclusion that we should not use TikTok.”
The former investigator warns: The use of TikTok would put personal and biometric data, movement profiles and voice tones into the hands of an autocratic government. While US companies possess similar data troves, their anchoring in constitutional democracies is a control instrument that prevents simple access to this data by a government, said Beerhenke.
The debate about TikTok has been going on intensively in the United States for a long time. In mid-April, US CEO Shou Zi Chew had to appear before the US Congress. The questions concerned national security issues and TikTok’s ties to China. Shou, a native of Singapore, was unable to provide clarity. “I’ve not been reassured by anything you’ve said so far,” said US Democrat Lisa Rochester. “I think quite frankly your testimony has raised more questions for me than answers.”
The US state of Montana has already passed a law that lays the foundation for a potential TikTok ban. Although it is uncertain whether such a ban would stand in court, the possibility has been hanging over the US offshoot of ByteDance in Beijing for months.
TikTok turned over almost six billion US dollars through advertising in the United States in 2022, so it is profitable for the company. This is why TikTok is now willing to make extensive concessions to the US authorities. The operators seem willing to cede the Americans’ control of the app’s content and data. It is said TikTok would allow the authorities to set up a management team, hand over core segments of its technology to the US software producer Oracle and share the algorithms for independent review.
This plan was dubbed “Project Texas” because Oracle has its headquarters there. This was reported by the online portal Cyberscoop. The idea for Project Texas came from the platform itself. Samm Sacks of the Paul Tsai China Center at Yale Law School sees it as “a serious effort to address US government concerns.” “The US government would have the ultimate oversight and monitoring of compliance with whatever they agree to,” he told the online portal.
The US government fears that the Chinese government could exert ideological influence on the approximately 80 million US users. Because TikTok’s algorithm not only suggests content for its users based on their own preferences and those of their contacts, but also scans the entire library of uploaded videos. This allows it to suggest any content to the user. In other words, Chinese soft power. However, this control can also lead to censorship and blocked keywords.
TikTok sees itself as unjustly accused. And it now even has to defend itself against accusations from an insider. The former head of the engineering department of the US branch accuses the parent company ByteDance of serving as a “propaganda tool” for the Chinese government. For example, he accuses TikTok of inciting “hatred against Japan” and restricting content that supported pro-democracy protesters in Hong Kong. The ex-employee also stressed that Chinese authorities had access to the company’s US data.
This statement has fuelled concerns among US authorities that TikTok is providing the Chinese government with a vast trove of personal data on US citizens to feed a sophisticated surveillance system. China is using its technology to crack down on critics worldwide.
In early December, Bytedance announced gaining access to data from users in the rest of the world. TikTok defended the decision as a “proven necessity” for employees in China to do their jobs, and the transfer is in line with the European Data Protection Regulation, for example.
The catch: Chinese companies in the People’s Republic are legally obligated to cooperate with the authorities. If the authorities demand data, a company has to comply. “Even a European data protection regulation is of no use here. We are dealing with an authoritarian state that no legal situation can prevent from accessing data,” says cyber investigator Beerhenke.
With Project Texas, all processes relevant to national security in the USA could be transferred to a separate corporate entity. The new organization would be given an executive board, which would have to be approved by the investment regulator CFIUS. An American version of the app would thus be completely shielded from the Chinese owners.
No matter how much Xi Jinping and Vladimir Putin swear their mutual friendship to the outside world, Russia’s missile attacks on Kyiv early Tuesday morning probably did not win them any points in Beijing. Only a few hours before the Chinese special envoy Li Hui arrived, the Russian army fired hypersonic missiles at the Ukrainian capital. Mayor Vitali Klitschko spoke of “one of the fiercest attacks on Kyiv since the beginning of the war.”
This was an insult to Beijing. As the Chinese Foreign Ministry in Beijing announced in advance, the trip’s goal was to talk to “all parties” to seek a “political settlement” to the Ukraine conflict. With its air strikes, Moscow is now showing what Vladimir Putin thinks of China’s offer: very little. Yet the leadership in Beijing continues to emphasize that it “takes a neutral position” in the Ukraine conflict – as the Foreign Ministry in Beijing also affirmed to the international press on Tuesday. To date, China has not condemned Putin’s war of aggression on Ukraine.
So now China wants to mediate. For the time being, observers can only speculate about the nature of Li Hui’s talks in Kyiv. The Chinese Foreign Ministry said that all talks would happen behind closed doors. Li will not comment publicly on either day in Kyiv. However, after his stay in Kyiv, the special envoy will travel to Warsaw on Friday. Afterward, Li Hui plans to hold talks in Berlin and Paris. This also indicates that Beijing seems to be interested in an honest exchange with the EU states.
Nevertheless, China’s mediation efforts are viewed with skepticism in the West. And rightly so. Unlike African states, which are mainly concerned about their food imports from Ukraine, China’s strategic interests in this conflict rest much more with Russia. Moscow is a welcome partner in the common opposition to the United States. China also benefits economically, for example, from its neighbor’s cheap gas.
Due to Western sanctions, Russia is more dependent on the Chinese sales market. In turn, Chinese companies are flooding the Russian market with goods and filling the gaps left by Western companies in the wake of the sanctions. Chinese companies have come to Russia to stay.
China’s twelve-point plan for resolving the Ukraine conflict presented in February, therefore, remained vague and was essentially formulated in Russia’s favor. The paper blames NATO and the USA for escalating the conflict. It frowns on Western sanctions against Russia as a sign of a “Cold War mentality.” Xi Jinping, at least, has publicly opposed the use of nuclear weapons in the conflict several times – which is also reflected in the paper.
There are some indications that China is now more serious about mediation than in February. For example, in late April – not least at the insistence of the Europeans – Xi Jinping and Ukrainian President Volodymyr Zelenskiy spoke on the phone for the first time since the beginning of the war.
Prior to the telephone call, French President Emmanuel Macron and EU Commission President Ursula von der Leyen had urged Beijing to play a more active role in finding a peaceful solution in Ukraine during their joint visit to Beijing. The fact that China is now sending a special envoy, Li Hui, to Kyiv at all can certainly be seen as a first concession to the West. Li is considered an excellent expert on Russia and has served as ambassador to Moscow for ten years. This qualifies him as a mediator.
And it is by no means only China that has not condemned Russia’s war of aggression and is now taking action. South Africa, too, has so far refused to denounce Russia’s actions officially. South Africa also held joint naval drills in February with Russia and China.
On Tuesday, six African heads of government announced their intention to seek a peaceful solution between Russia and Ukraine – alongside South Africa, Zambia, Senegal, the Republic of Congo, Uganda and Egypt. According to South African President Cyril Ramaphoa, Putin and Zelenskiy have agreed to receive a delegation from the group in Moscow and Kyiv. So there are mediation efforts from other sides as well.
Beijing surely feels a certain satisfaction that the once superior Russia now depends on China as its junior partner. At the same time, it is in Beijing’s interest to preserve Putin as Russia’s ruler. His fall could possibly bring about a pro-Western leadership in Moscow. And then Beijing would find itself isolated. Beijing is, therefore, only likely to be interested in serious peace if it secures Putin’s power.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
According to China’s National Bureau of Statistics, the economy grew by 4.5 percent year on year in the first quarter of 2023. While that hardly matches the robust growth of the pre-pandemic period, it did exceed market expectations. And with the right policies, China can do even better
There is plenty of pessimism about China’s economic prospects nowadays, with many warning – not without reason – that China has entered a deflationary period. In the first quarter of 2023, China’s consumer price index (CPI) rose by only 1.3 percent year on year – down from 1.8 percent in the previous quarter. More striking, China’s producer price index (PPI) fell by 2.5 percent year on year in March – its sixth consecutive month of decline.
This is not a new trend. In fact, China’s PPI has been negative for the better part of the last decade. Beginning in March 2012, China’s PPI was in negative territory for 54 consecutive months. In January 2019, it turned negative again – and remained so for 17 months. While CPI has remained positive, it has grown by less than 2 percent annually, on average, for a decade.
While claims that China has entered a deflationary period are excessive, the data indicate that China’s economy continues to be hamstrung by low effective demand. Official figures also support the claim that China’s GDP growth has been below potential for some time.
This may not have been surprising when the zero-COVID policy was triggering regular lockdowns, including in economic hubs like Shanghai. But the abandonment of strict pandemic-containment policies in December was widely expected to unleash pent-up demand, leading to a robust recovery. Some even warned that inflation could spike, as supply struggled to keep up.
None of this came to pass. Non-economic factors – linked, for example, to global geopolitical tensions – bear some of the blame. But, in my view, one of the most important reasons for China’s weaker-than-expected economic performance since December is the government’s overly cautious approach to macroeconomic policy, particularly fiscal policy.
China’s government has set a growth target of “around 5 percent” for 2023. For an economy that grew by 6.7 percent, 6 percent, 2.2 percent, and 8.1 percent in 2018-21, that is simply too low. A better approach would aim for 6 percent growth – an entirely feasible target, given China’s recent performance. While the government’s reluctance to aim for a higher growth rate is understandable, a conservative target can create a self-fulfilling prophecy, by weakening confidence and failing to exploit growth potential fully.
Some policy interventions, such as cash transfers, would provide a direct and immediate boost to consumption, which accounted for 54.3 percent of GDP in 2021 and had been the main contributor to GDP growth for years before 2022. But, as China’s government well knows, consumption is a function of income; a sustained, broad-based increase in incomes depends on economic growth; and infrastructure investment is traditionally the state’s most effective instrument for boosting growth when effective demand is weak. Despite past investments, China still has a large infrastructure gap that urgently needs to be closed.
There are risks to this approach. As China learned when it implemented a 4 trillion yuan (578 billion US dollars) stimulus package during the 2008 global economic crisis, large-scale public investment in infrastructure can lead to an increase in local-government debts, ultimately undermining financial stability.
But rather than discourage state-led infrastructure investment, this experience should motivate policymakers to engage in more careful planning that avoids creating additional “white elephants.” It should also spur changes to how the government finances its investments.
China’s authorities have historically been very reluctant to run budget deficits. As a result, the vast majority of funding for past infrastructure investments has been raised by local governments on capital markets at high interest rates. Spending by the central government accounted for perhaps less than 1% of total infrastructure investment in 2021. Small wonder local governments are weighed down by debt.
For the next round of infrastructure investment, the central government should contribute a significantly larger share of funding. At the same time, it should step in to help local governments resolve their debt problems. This will require the central government both to increase its budget deficit (as a share of GDP) and to sell more government bonds to the public in 2023.
Barring a “black swan” event, China can achieve 6% GDP growth this year, thereby ending a 12-year slowdown. But this will not happen on its own. Carefully planned and prudently funded infrastructure investment, supported by expansionary fiscal policy, is essential.
Yu Yongding, a former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, served on the Monetary Policy Committee of the People’s Bank of China from 2004 to 2006.
Copyright: Project Syndicate, 2023. www.project-syndicate.org
The journey to Mars is long and perilous. China’s first rover Zhurong didn’t survive the trip – it might have been best to stay in the Gobi Desert, like its little toy friend. About 20 kilometers from Jinchang, Gansu Province, lies Mars Base 1, a nearly 70-square-kilometer survival simulation camp modeled after the red planet. Visitors can book a Mars experience here in a replica space suit. Occasional sandstorms included.
