China’s ‘Marshall Plan’ Will Not Solve Overcapacity in China’s Economy
The majority of industries in China face severe overcapacity, which seriously threatens the smooth functioning of China’s economy.
Despite China’s high hopes, “the road map for launching an Asian Investment Bank” remained only a plan at the APEC summit this year. In addition, the Mexican government decided to cancel a $3.7 billion Chinese bid for a hi-speed railway project. China’s “Marshall Plan”—to export its overcapacity—is thus off to a bad start, and Beijing will still need to find ways to deal with this “nuclear threat” to China’s economy.
Phasing out overcapacity would result in huge layoffs, which would destabilize society and contradict the government objective of stability maintenance.
Why China Wants to Implement a “Marshall Plan”
Most comments made in China regarding the country’s “Marshall Plan” focus on overseas investments. And while some mention the term “export capacity,” they deliberately omit the key modifier for the word capacity: over.
China seeks to establish an Asian Infrastructure Investment Bank (AIIB) and, with that bank as the core, to materialize its plan for a “one belt and one road,” i.e., a “Silk Road Economic Belt” and a “Maritime Silk Road of the 21st Century.” Through this “one belt and one road,” China would be able to export its unwanted excess capacity. Commentators have dubbed this “China’s Marshall Plan.”
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