China’s ‘Great Leap Outward': The AIIB In Context (Institute of Southeast Asian Studies)

After some thirty years of double-digit economic growth, China has become dependent on the world economy with one of its two key drivers having been labour-intensive manufacturing exports. The other is domestic infrastructure and real estate development. Xi Jinping is regarded as China’s strongest president since Deng Xiaoping which is fortuitous because China now faces considerably changed circumstances both at home and abroad which require talented leadership and a much more pro-active approach. Thanks to an inappropriate response in western countries to the 2008 global financial crisis that continues to this day, weak consumer demand in developed country markets coexists with massively inflated values in asset markets and a glut of investment capital in a very low interest rate environment (with negative nominal interest rates in some countries). In short, China can no longer rely on the US to lead the world economy with consumption growth, and instead it must pro-actively foster new sources of growth by further promoting the rise of Asia. It can do this most effectively by spurring regional infrastructure development – because of the scale factor as well as the demand multiplier effect – which promotes future growth by complementing, and increasing the returns to, the further integration of trade and investment within the Asia Pacific region. (...) http://www.eurasiareview.com/10062015-chinas-great-leap-outward-the-aiib-in-context-analysis/