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How Xi Jinping Can Strengthen the Chinese Economy

With Chinese President Xi Jinping having largely continued many of his predecessors’ policy initiatives, indicators that were improving continued to improve, and the problems that were hard to fix remained unfixed. The biggest change has been in Xi’s execution, which has left much to be desired.

CHICAGO – Xi Jinping is poised to become the first three-term president in Chinese history when the Communist Party of China’s 20th National Congress convenes this month. That makes this an opportune time to take stock of Xi’s economic-policy record from the past ten years and explore some obvious steps to improve economic performance in the next term.

When Xi assumed China’s top political position in 2012, the economy was thriving, but it also had many serious problems. GDP had been growing at an average annual rate of 10% for over a decade. But a slowdown was inevitable, and GDP growth rates have indeed declined almost every year since 2008. Moreover, inequality was rising, with the Gini index having increased by 13% between 1990 and 2000. By the start of this century, inequality in China had surpassed that of the United States for the first time in the post-1978 reform era.

Meanwhile, pollution was literally killing China. By 2013, Beijing’s air had an average of 102 micrograms of PM2.5 particles per cubic meter, whereas Los Angeles – a city historically known for its air pollution – had a PM2.5 reading of only around 15. Chinese city dwellers increasingly complained about the cardiopulmonary illnesses and early mortality associated with pollution. And China was also plagued by water pollution, owing to the chemical runoff from its factories, farms, and mines. In rural areas, entire villages and towns sometimes had to move because their water supply had been irreparably contaminated.

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