Integrate and rise together
Xi Jinping wants to stamp out local protectionism in China's central region.
Speaking at a symposium on Wednesday in Changsha, Hunan, the big man demanded:
- “[Officials must] rectify local protectionist behaviors, promote the rational flow and optimized allocation of various factors of production across regions, and better participate in the construction of a unified national market."
Some context: The central region encompasses the provinces of Anhui, Henan, Hubei, Hunan, Jiangxi, and Shanxi. It represents one-fifth of China's GDP.
- Beijing has pushed for growth of the central economies in a bid to close the wealth disparity with eastern provinces, with policy programs dating back to 2006.
Some more context: By stifling market competition, local protectionism acts as a significant drag on economic growth.
Get smart: Protectionist behavior has dropped significantly since a crackdown launched in 2021, but the leadership's repeated calls for a unified national market suggest there is far more work to be done.
Our question: Eliminating local protectionism requires fiscal and tax reforms to remove the financial incentive for local governments to protect local businesses.
- With Xi determined to stamp out protectionism, will he throw his weight behind fiscal reform efforts?