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China's NPC session is now over, and from an economic policy perspective it is hard not to feel rather disappointed by the whole thing. Somehow I thought unprecedented circumstances would lead to some breakthroughs. But no. A thread. 1/
There was, for instance, no "big slate of market reforms." Of course there was plenty of rhetoric in support of the private sector and small businesses. The decision to extend tax breaks for them is substantive and very welcome, but temporary. 2/ https://twitter.com/JulianGewirtz/status/1263570672078422017
There was no rethinking of the model. Xi Jinping's "strategic shift" to focus on domestic demand is just a repeat of the same stuff the leadership said after 2008. And we all know how well that worked out: ballooning debt and collapsing productivity. 3/ https://www.scmp.com/economy/china-economy/article/3085969/chinas-economic-strategy-shift-shows-xi-jinping-preparing
The return of "special treasury bonds" was a disappointment. They could have done something cool like capitalize a policy bank for SMEs. Instead the bonds were just another accounting gimmick to reduce the headline deficit ratio. 4/ https://blogs.imf.org/2020/04/23/a-post-coronavirus-recovery-in-asia-extending-a-whatever-it-takes-lifeline-to-small-businesses/
The biggest disappointment is the failure of the social safety net to cope with mass job losses. Premier Li promised to "extend the coverage of unemployment insurance" as well as the dibao, and I hope he will. But it's a promise that comes too late, and with few real details. 5/
China is trying hard to avoid repeating the mistakes of the 2008-9 mega-stimulus, and they deserve some credit for that. But less has changed than you might think. They are still doing the same old investment-focused stimulus, just a more watered-down and conservative version. 6/
Maybe it will all work out fine and all these complaints will seem empty in hindsight. But it's hard not to feel like China has missed an opportunity to reset its economic system for the better. I guess it's not alone in that. 7/ End.
