Maybe China can improve its environment in 2016

Comments on Kerry Brown "China’s challenges in 2016", 4/02/2016

On the foreign policy front, the formal launch of the Asia Infrastructure Investment Bank should also qualify to be a very significant achievement.

The bilateral summit meeting between China and Taiwan, while highly symbolic, is questionable in terms of foreign policy achievement, particularly in the context of the anticipated change in the governing party from the Nationalist Kuomintang Party (KMT) to the Democratic Progressive Party (DPP) in Taiwan and the subsequent confirmation in the January election. It was and still is unclear what purpose and effect of a meeting with a losing party.

While China, in 2016, faces the same very challenging task in term of rest its slowing economic growth in this year as in the last two years did, given the not so promising world economy and domestic rebalancing, maybe it is having a reasonably good opportunity to do something in improving the environment, particularly air quality when it forces the closure of some inefficient and high energy consuming plants in the steel and other industries. But the deficit in environment is so large, it would be difficult for people to feel it probably.

China probably needs a bit more active fiscal policy to arrest the slowing economic growth rate, although any fiscal stimulus must be well targeted.

While it has been a big thing inside China when it set up the Shanghai Free Trade Zone, it is unclear to me what that can really achieve, particularly in the context of economic rebalancing. It may improve the efficiency of importing, but that could also be a drag to domestic growth, as imports are subtracted from growth.