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The ‘New Normal’ Chinese Style and What It Means for the Global Economy

Retail Price: £20.00/$35

This book represents the latest thinking from China’s leading academics and economists about how the country needs to adjust its economy to fit the ‘new normal’ Chinese style.

As the authors point out, in international parlance, the new normal equates to slow economic recovery without employment growth where many developed economies remain fragile almost a decade after the global crash of 2007/8 with interest rates close to zero (or even negative), quantitative easing and the prospect of secular (long-term) stagnation.

China views its new normal as being slightly different, characterised by slower – yet still substantial – growth. The key point of the book is that China has to face the fact that this slower growth period it has entered is not just a cyclical phase to be endured for a few years until growth picks up again and that traditional methods that worked in the past such as demand-side stimulus will not resolve the situation.

If the global new normal is regarded as a pessimistic assessment of future world economic trends, then China’s new normal contains positive elements of economic evolution towards a more advanced future, involving a more complex division of labour and a more rational structure.

There is a realisation at the highest levels in China that the country has to completely rethink the way it manages the economy and that both supply-side and demand-side measures are needed to get the economy onto a healthy long-term track.

The authors recognise that in evaluating the current situation and in planning for the future, China must first settle down to review the road it has travelled, carefully analyse the ‘old normal’, and clarify where the country started from a few decades ago, what is the trend of development, why it cannot continue down the old track, the direction of future development, and what kind of real economic base and institutional mechanisms need to be created to achieve a healthy transition to the new normal.

What marks this book apart from others in the field is its frank appraisal of problems such as: ‘exaggerated GDP’; how the hidden cost of environmental pollution (if factored into a green GDP figure) effectively lowers the real GDP growth rate; and excessive demand-side policy measures which aggravate problems such as ‘zombie’ companies.

The overall tone of the book is deeply analytical and positive, suggesting that only new policies based on both supply and demand-side measures combined with devolving more government economic decision-making power to the private sector and a focus on innovation to move Chinese companies and organisations higher up the value chain will enable China’s economy to prosper in the new normal.

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