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He Qinglian: Economic Slowdown Not Because of Anti-Corruption Campaigns

On Voice of America, He Qinglian, a Chinese economist based in the U.S., refuted the recent opinions, voiced by many oversees, that the strong anti-corruption campaign has led to 0.6 to 1.5 percentage points in slower economic growth in China.
According to He, "The talk that anti-corruption campaigns lead to an economic slowdown is a superficial opinion. Such opinions disguise the fact that two major structural deficiencies in the Chinese economy are related to government behavior."
"China’s anti-corruption campaign has led to two consequences: first, a decline in local government’s investments; second, a reduction in final domestic consumption. Such a correlation is less likely to occur in other countries, but has, unfortunately, become a reality in China. The reason is also simple enough. In the past five years, the main source of investments has been the government, including the famous 4 trillion yuan stimulus package from the central government and 20 trillion yuan in local debt. Additionally, in the national final consumption, government consumption accounted for an extremely high proportion. This structural deficiency is China’s largest economic risk. The anti-corruption campaign just let the pustule rupture in advance. Without anti-corruption campaigns, that risk does not disappear. Rather, with the support of local investment and government consumption, the pustule continues to grow."
"The real reason for China’s economic slowdown is as follows:
"About the slowdown in economic growth in China this year, it resulted from the National Development and Reform Commission (NDRC) notice as early as at the beginning of the year. There were two reasons. The first was the huge excess of capacity, while the economic structure needed adjustment and the growth of investment demand was inhibited. The second was the increase in the pressure of local government debt, which also restricted the expansion of government investment."
Source: Voice of America, August 28, 2014