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President Xi and China-US economic relations

By Colin Speakman ( Updated: 2015-09-25 09:08

President Xi and China-US economic relations

Chinese President Xi Jinping (L) and Ray Conner, president and CEO of Boeing Commercial Airplanes, tour the Boeing assembly line in Everett, Washington September 23, 2015. [Photo/Agencies]

President Xi Jinping had many objectives to achieve in shedding light on China's economy, policies and dreams of the Chinese people in his US visit. I was most interested in his economic views. Of course we have begun to see that when China sneezes, the world catches a cold, and President Xi was at pains to reassure that China was not sick.

Yes there is some turbulence in the longer term reform process that he acknowledged, but, against that, China is achieving acceptable economic growth. Whereas in the old days 10% a year growth doubled the economy in seven years, 7% a year will need more than 10 years - yet now that rate is enough to double Chinese citizens' incomes per head between 2010 and 2020 given the strong start early in the decade.

President Xi showed support for the role of market forces, in investment decisions, in the rate of the RMB and in foreign business opportunities. Fixed Asset Investment has played a key role in the Chinese growth rate and it cannot always be left to government investment. President Xi made it clear that China was very open to Foreign Direct Investment and attracted $120 billion of it in 2014, making it the leading destination.

However American exports are not so exposed to variations in the Chinese economy - the US exports far more to Canada and Mexico. It remains the issue as to whether China can continue to raise domestic consumption and grow markets that give a return on sales in China from foreign investment there - a few multinationals have seen big hits to China sales, including America's Hershey Chocolates and India's, once British, Jaguar Land Rover.

Yet President Xi's visit just preceded that of Britain's Chancellor to Beijing and meeting Premier Li - George Osborne praised China's economic potential, too. For American citizens, China's economic role is still in supplying a high consumption country with inexpensive and wide ranging products as imports - the recent fall in the RMB v US dollar does no harm to that aspect. Americans should not worry too much about the Chinese economy.

The author is an economist and Director of China Programs at CAPA, The Global Education Network, a US/UK based organization that cooperates with Capital Normal University and East China Normal University.

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