The Chinese political and economic system is still considered by Hanoi to be the model until the ball of Beijing is broken in 2020 with an epidemic originating from Wuhan. This week’s Economic Forum interviewed economist Nguyen-Xuan Nghia about potential risks in the Chinese economy.
China’s economic growth rate is only about 6%, but the Covid-19 epidemic originating from Wuhan can reduce this growth momentum by about 2% more. Thus, the question is whether the market economy model with Chinese colors is still valid for Vietnam?
Doctor of Economics Nguyen Xuan Nghia said: – First, talking about the growth rate, we have to consider from where the economy increases to what level. From a deserted land with only one factory, building another factory is considered to have achieved a 100% growth but compared to neighboring states that have hundreds of factories, building 20 more is only a 20% growth, in fact they are two dozen times bigger than us.
By comparison, some of the poorest African countries, such as Chad, also achieved growth rates of nearly 60% or Liberia of more than 20%.
A war-stricken country like Iraq can also grow by nearly 20% and civil war like Georgia also has a rate of nearly 10%.
Growth is not yet under development, and the Chinese economy actually has many disadvantages that could lead to dangerous fluctuations this year that Vietnam should pay attention to. 2020 will be a rigorous test for the model of market economy within the socialist belt.
If you look at it from Mao Zedong’s cruel revolution, it is not wrong, but on a larger scale, China has a problem, that dragon has a pea-like head and the leader of this country is more aware of that than Vietnam’s leaders.
The economic motive made the leader not to be the exclusive center like before, but the corruption associated with the one-party regime also made the leader despised, unlike the time when the whole country seemed to go to the field under the revolutionary slogan of the party. This year can also see the bankruptcy of a half-market economy model and China, which is chaotic, the Vietnamese economy will be seriously affected, the Vietnamese leadership will lose support from Beijing.
ν Why don’t you seem optimistic about China’s economic performance?
Expert Nguyen-Xuan: Because the leader of this country, General Secretary cum President Xi Jinping built a magnificent monumental structure on fragile foundations. When that architecture collapsed, not only people and investors were damaged but also neighboring countries, including Vietnam.
China consumes the largest energy in the world, importing more crude oil than the United States. Despite having the world’s fifth reserves, China cannot meet its demand. In addition, it pollutes the environment.
After the organizational issue, look at the downside of China’s growth rate in a labor crisis, with full-time and part-time unemployment as high as the American workforce, more than two. hundred million people. Each month, the country must create a million new jobs or meet social disorder.
Due to disguised unemployment, the reform of state-owned enterprises was stalled, which was enough to cause social disturbance and political risk for leaders. After the type of energy bottlenecks and the labor crisis, China is also facing an imminent financial crisis, as in the case of Vietnam.
Because of its socialist orientation with Chinese model, Beijing’s leaders want to benefit from economic freedom and the party still holds power.
They used the banking system as a center for collecting national assets and focusing on the state-owned sector, with the result that the banking system was flooded with debt and many businesses went bankrupt.
Of course, foreign investors are fleeing wildly to make up for the deficit like blowing wind into empty houses. Vietnam understands this, because there is a similar problem. But, the situation in China is even more dire because another phenomenon is capital dispersion.
International media keep talking about foreign investments being poured into mainland China without paying attention to the type of investment from mainland China transferred to other countries.
In addition to dispersing the assets of party members who want to prepare themselves for a better future after losing their power, we also see the financial activities of Chinese banks and businesses because they feel that they bring money to invest in other countries for more benefit and safer.
If they firmly believed in the economic future of this country in the form of a socialist country with Chinese model, there would be no such dispersal, and this is a paradox that few people talk about.Vietnam should look into that phenomenon.
Not to mention another paradox that China is focusing its efforts on exporting to collect foreign currencies and transferring those foreign currencies out again.
It seems the leaders of this country have not learned the experience of Japan thirty years ago, is austerity to export maximum regardless of profit and loss, just increasing its market share is enough, then close your eyes to invest abroad, buying anything, with thinking that it is the expansion of power and influence.
Also, China has blown up an investment balloon with many low-value projects, typically in Shanghai or Shenzhen, not to mention deadlock in Hong Kong.
Slow-moving leaders prefer to open magnificent works for their reputation but they rarely think of small but practical projects for ordinary people. Until it all fell apart, as East Asian countries faced in 1997, it blamed capitalism and speculation.
Will the Chinese ball burst and now it is breaking before our eyes?
We have all the materials needed for an investment ball bust. The Chinese economy must slow down the growth momentum to avoid the risk of inflation when the market is over with enthusiasm and prosperity
We do not realize that for decades, Vietnamese leaders have been studying to develop the country which went out of many wars.
During that time, what did the leader of this country learn and do for the evolution of society and the nation? During that time, the halfhearted reform only improved the standard of living for a minority of party members, but the country was still lagging backward in comparison to other countries, and the rich and poor deep hole still dug deep.
Vietnam has many of the same problems as China, with lesser potential. A crisis in China may be a warning, sometimes too late.
Vietnam does not have a strong government, which is capable of influencing and supporting national social and economic activities as in democratic countries, but only a authoritarian but powerless government to work for the country.
Confusing authoritarian yoke with the power of the state is outdated after nearly half a century in power. Vietnam needs more reforms, when what’s happening in China is an opportunity for innovation.
Vietnam and China both share the same institution under the communism with the socialist-oriented market economy model full of contradictions and delusions.
The Communist Party in both countries rules the people in a dictatorship, having no democracy and lacking freedom. It is this that has led to today’s calamity for the people of both countries, because of the lack of a mechanism to monitor and check power by opposing political forces and press freedom.
In order to develop sustainably and socially, only the only way is that the party and government of both China and Vietnam must return real power to the people of the two countries.
Thu Thuy from Hochiminh city – Thoibao.de (Translated)