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From the position of a strong ...

Doctor of Economics, Professor, Deputy Director of the Institute for Far Eastern Studies of the Russian Academy of Sciences Andrei Ostrovsky - about how China is ready to build a "small welfare society" and whether it will be content with it

From the position of a strong ...
- Andrey Vladimirovich, China refers to those few states, behind the curves of the "general line of the party" which the whole world follows. The XIX Congress of the Communist Party of China is over. What unexpected people noticed on it and what changes can now be expected in the domestic and foreign policies of this country?

- There was nothing out of the ordinary at the congress. In any case, for me, as a Sinologist, everything that happened was quite expected. The most important thing is that the congress determined at what point in its development modern China is and what tasks it sets itself for the next thirty years or more. The main goal is to build a “small prosperity society” by 2020. It was delivered a long time ago, its implementation is quite realistic. I will say more: such a society has already been created in the coastal provinces of the country. Now it is necessary to lift the western, more backward regions out of poverty. Here, too, there are shifts for the better: the number of people living below the poverty level has significantly decreased; they are now about 4% of the population in China. Five years ago, every tenth Chinese was poor. The result is quite serious, and the report of the General Secretary of the CPC Central Committee Xi Jinping says that by 2020 they intend to "pull out of poverty" all citizens. By the way, the poverty line itself is being raised. Now it has been carried out at about 2 thousand yuan per year (about 20 thousand rubles for our money).
- What is the average salary in China now?

- It is necessary to distinguish between the average salary and the average income. In the city, people receive an average of 4 yuan a month, which is about 40 rubles for our money, and 480 rubles a year. But we must understand that these data only take into account workers and employees, and do not forget about the 600 million army of the peasantry. These people live mainly on subsistence farming, they don't go to the grocery store. The average income of the Chinese - in terms of yuan for the usual currency - is about 230 thousand rubles annually. As with us, of course, there are different categories of workers and their salaries, and people can add income from renting an apartment or land, etc. to their salaries. Is that in China everything is more orderly, and the government more strictly controls any economic, financial and other processes from above. Including the activities of officials and managers. At the XIX Congress, it was decided to create a unified disciplinary inspection commission, which will keep under control the leaders of all levels - from the county to the very top.
- Does the Communist Party control state statistics, as it was in our country in Soviet times? Is it possible to trust the Chinese official data at all, or are they really (as they often say) godlessly distorted for the sake of ideology?
- Of course, the CCP controls Chinese statistics. In the PRC, there is a state body - the State Statistical Office of the PRC (hereinafter referred to as the PRC GSO), which is directly subordinate to the PRC State Council. This is a state structure, the head of which is approved at a session of the National People's Congress - the highest legislative body of the PRC. But unlike Russia, where Rosstat has become one of the departments of the Ministry of Economic Development, the PRC's State Statistical Office is responsible for the accuracy of the statistical data provided. Moreover, the PRC SSO maintains close ties with the international structures of the UN and the IMF and from time to time revises the obtained statistical data in accordance with changes in the methodology for calculating statistical data for comparison with similar world statistical indicators.      

As for ideology, I do not think that the parallels between today's China and the Soviet Union of the era of stagnation will be correct. It is one thing to hide deplorable results and wishful thinking. It is quite another to follow a course that yields tangible results. The Chinese do not build utopias about the fact that "communism will win" in the foreseeable future, "every family will get an apartment," etc. But the documents of the congress outline guidelines: by 2035, basically, to carry out socialist modernization, by 2050 - to build a powerful state, a society of a harmonious civilization. The main documents of the congress (I mean the report of the Central Committee of the CPC, the resolution on the report and the charter of the Communist Party of China in the new edition) specially noted: Mao Zedong raised the Chinese people from their knees, Deng Xiaoping made them prosperous, and Xi Jinping - strong ... China proceeds from the premise that it can and should become strong on a global scale when solid foundations for a strong economy are laid. For which now all efforts are being made.
- China has made its historic breakthrough by actively entering foreign markets. Is it planned now to turn to the needs of the domestic market and to the mass consumer in your own country, what financial mechanisms are used for this?
- In 2013, China launched the Belt and Road Initiative. And it means not only the development of foreign trade, but also special attention to the development of China's interior regions. Now the income gap between them and the rich coastal territories is colossal; this is considered the main social contradiction in the state. Such imbalances are smoothed out by subsidies from the central budget. So, for example, Tibet's expenses are 10 times higher than income, if this region is not helped, it simply will not survive. Therefore, local budgets - with rare exceptions - are always reduced with a huge deficit, and the central one - with a significant surplus, and already from it there are subsidies for certain regions.

In the past two years, local budgets have been allowed to issue their own loans and bonds, albeit under strict control of the relevant regional offices of the People's Bank of China. The emission of bonds and money is also regulated by local assemblies of people's representatives (legislative authorities). Local authorities create enterprises that are engaged in large-scale capital construction and can take bank loans. But considering that all these structures are public and banks too - the state simply shifts funds from one pocket to another.
- And how stable is such a system in the event of global crises?

- For example, in 1998 the situation was very difficult - a huge number of state-owned enterprises had accumulated so-called “bad debts”. The problems were exacerbated by the Asian financial crisis, which later became global. What has the Chinese leadership done? It forced all enterprises that were in debt to issue shares and distribute them to creditor banks for free. In fact, banks got the opportunity to interfere in the work of enterprises, and then the financiers, already from the position of "owners", used all their possibilities to keep production afloat, find sales markets, etc. Some enterprises survived with this help, others went bankrupt. But in general, this made it possible to avoid a global collapse of the entire economy and the real sector in particular.

In general, in China there are now about 12 million enterprises, and if we add to them the so-called microenterprises ("noodle tray" and something like that, the most common small business in China) - then more than 100 million.

Of the official 12 million enterprises, about one million ruins a year and the same number of new ones. The only exception was in 2008, when 2 million went bankrupt - many of them were export oriented, they sold textiles, and the drop in demand ruined them. But in general, business in China is now developing quite confidently, young people are eagerly and actively participating in this sphere.
- Are investors also confident and active?

- Quite. Let's take a textbook example: the construction of a third terminal at Beijing Capital Airport for the Olympic Games. We managed to attract a huge mass of investments from abroad on the basis of public-private partnership: the state gave guarantees that after a certain number of years it would pay dividends to investors, and in the event of force majeure, it would take on most of the risks. And Chinese investors went into this business. I don’t remember that we have ever managed to implement something like that.

US investments in the economy of China in the past year amounted to about 2,5 billion dollars. Previously, there were twice as many, but when the income tax was raised from 18 to 25%, the flow of investment from the US, Europe, Canada and Australia fell slightly as the benefits disappeared. In the Chinese economy, most other countries now invest Hong Kong, Singapore, South Korea, Taiwan.
Domestic investors, of course, are not as active as external investors. But if we analyze the structure of foreign investment in the Chinese economy, then 68% of them are money from Hong Kong. That is, in fact, too, Chinese funds - simply "from offshore", from the "third country", but with a clear origin. For a Chinese entrepreneur, what we call offshore is certainly not the Bahamas or the Cayman Islands. Hong Kong is clearer and closer.

And it is no coincidence that when China decided to "return Hong Kong to the Motherland" by agreement with Great Britain in agreement with Great Britain, nobody was going to cut a chicken carrying golden eggs. The Hong Kong Stock Exchange, banks, a port for the People's Republic of China are areas where links are being established with other countries that for some reason do not want to directly deal with Beijing and Shanghai. Than it is bad?
- The authors of many Russian programs of the "turn to the East" pin special hopes on the growth of trade with China. But it's not that simple. What gets in the way when we try to enter the Chinese markets with our products?

- The trade turnover between Russia and China has decreased in recent years, according to my calculations, to about $ 70 billion a year, despite the fact that before the crisis Russia had plans to increase it to $ 100 billion. There are two reasons for this - a sharp drop in the ruble exchange rate and a decline in prices for a barrel of oil. In physical terms, we have significantly increased oil exports to the PRC, and in monetary and foreign currency terms, we have lost everything. Now we need to decide what else, besides "black gold", we can supply to China with profit for ourselves.

Attempts are being made to expand the export of agricultural products. However, China - which is absolutely natural for any country - always defends its market. He produces a lot of goods that do not require foreign competitors at all. But there are certain niches that we are quite capable of taking and mastering. For example, we always take large amounts of soybeans. China itself produces about a third of the required volume of this product. Soybean imports are one of the key import directions in the country after oil, gas and energy resources. Of course, such negotiations should be dealt with by relevant ministries and departments interested in promoting our goods in the Middle Kingdom. And, of course, in the form of a reciprocal step and we must give China the opportunity to enter our markets with these or other goods. For example, cars.

The trouble is that we do not always adequately imagine the Chinese market and its needs. There is no sense in trying to throw something in there that is certainly not necessary for partners. But there is something that we will readily buy. For example, natural gas or high-quality anthracite coal from Tuvan deposits. China itself has developed coal mining, but such grades are required for it to produce certain types of steel. By the way, they produce 1200 million tons of rolled metal annually. You can not even ask "where they are so much." The Chinese are now building a huge number of railways and roads, buildings, etc. And they are trails according to the norms of their technology put in three layers, with reinforcing braids - this is a huge mass of metal and rolled metal. As a result, they do not need repairs for fifty years. With our do not even want to compare.

Another touch to the portrait of modern China - high-speed rail. The profits they give only on the route Beijing-Shanghai. And on the others, profitability is achieved due to the fact that passenger transportations are transferred to high-speed rails, and freight (which gives the main revenue) are on a parallel route, without delays due to electric trains and fast trains. It's only here that "Sapsans" and freight cars are allowed on one railway and are forced to wait for three hours while waiting for the "car to run" ...
- We have a common road with China, albeit drawn mainly on paper, - a project of a transport corridor from Asia to Europe. How feasible are these plans?

“There are seven“ arms ”along this path, and the Russian one, the northernmost of them, unfortunately does not develop. Negotiations are underway, but there is little success in them. The Kazakh and Chinese parts of the route have already been built, but the plans to lay the route at least to Kazan and further to Moscow have remained unfulfilled. Not only for the 2018 FIFA World Cup, but much later, they are unlikely to come true.
Until the security problem is resolved and the situation in Syria is not resolved, the “southern route” (which from ancient times went through Iran to Beirut) will also not be able to work. Today, although with great difficulties, only the middle route is operating - through the Caspian Sea, Aktau - Baku - Tbilisi - Kars and to Istanbul. This route could be improved, but political relations between Armenia and Azerbaijan hinder. But in any case, the track is profitable, since there is no competition.
- The security of a country is primarily the state of its army. At the CCP convention, it was said that by 2020 the Chinese army will be the most powerful in the world. Is this feasible and is it necessary to fear in advance a new "potential adversary"?

- It is unlikely that by 2020 the Chinese army will become the most powerful in the world. At present, in terms of spending on military construction from the state budget, China is noticeably inferior to the United States. Nevertheless, China possesses the weapons necessary to inflict unacceptable damage on any adversary, including the United States. China already possesses atomic and hydrogen bombs, space weapons, ballistic missiles, as well as an aircraft carrier and, at the final stage of development and refinement, a fifth-generation J-20 fighter with variable wing sweep. To this it should be added that China can always strengthen the army with a huge mass of human resources, the level of education of which is constantly growing from year to year. But in any case, we can get accurate information about any army in the world only as a first approximation. Chinese is no exception.
- We again return to the problem of China's informational closure from the whole world, despite the active exchange of goods and the growth of investments. Even the Internet in China is strictly controlled by the state. Why does a completely modern state need this and what consequences can it have?

- China is currently covered by the Internet - over 60% of the country's population. Moreover, according to the programs of the 13th five-year plan (2016-2020), over 80% of the country's population will be covered by various forms of the Internet. China has a huge number of Internet clubs and salons, but a significant part of the country's residents are already entering the Internet through their mobile phones. phones, iPhones and iPads. At the same time, the Internet in the country is under the strict control of the state and not all are allowed into the country. In particular, the Internet company “Google” is not allowed into China, and in general information on the Internet is dosed. All this is a consequence of the events of 2009 in the city of Urumqi, the capital of Xinjiang, the national outskirts of China, when it was possible to provoke mass unrest in the city center via the Internet. But in general, the Internet in China is available to both Chinese and foreigners.    
- And we, people of a completely different culture and history - will we ever be able to truly understand China?

- There would be a desire and opportunity. But as a Sinologist, I can say that good specialists have been desperately in need for many years. According to the program approved by the Ministry of Education, in the first year, even in specialized universities, no more than 6 hours are given. It is necessary at least 12, and better - 16. The Chinese language is digested much more difficult than any Western - and pronunciation, and hieroglyphics, and much more for us are very unusual. As a result, people graduate from the university with a diploma, where knowledge of Chinese is noted, but in fact they need to be sent to this country for another year for two years. The problem is also that linguistics is one, and the country's knowledge in all the richness of its history, culture, literature, economy, geography is another. Country studies in universities are still not enough. Ask the young Sinologists, where the contour map is located in Guizhou Province or in which part of China the Brahmaputra River flows - and I'm not sure that they will respond immediately. On such seemingly trifles, the most ambitious projects are constantly at risk of crashing. It's a shame, but a fact. Let's hope that we will manage to solve these problems someday. The Chinese are not in a hurry to hurry, but they always manage to do everything on time. We should take an example from them.
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