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Li calls for policies to encourage spending (2)

By WEI TIAN and CHEN JIA (China Daily)

08:18, April 18, 2013

Jin Liqun, chairman of the board of supervisors of China Investment Corporation, said on Wednesday that economic growth may remain moderate for the next five years — lower than 8 percent year-on-year — as the advantage of abundant inexpensive labor recedes.

"China's economy should depend on creating more jobs by upgrading its industrial structure. Excessive reliance on investment in infrastructure construction is unsustainable," said Jin, who was also former vice-minister of finance.

The new leadership faces more challenges from social equity issues, an enlarged wealth gap and employment pressure, and a modest growth pace indispensable to solve those problems, he said.

Jin said the shadow banking system and increasing local debt are worrisome.

Over the next decade, a growth rate of 7 percent may be acceptable by the government, said Ma Jun, chief economist in China with Deutsche Bank.

"Labor costs will continue to rise because of the persistent decrease of the labor population. The Chinese labor force is predicted to fall by 200 million in the next 30 years," Ma said.

Giordano Lombardo, deputy CEO of Pioneer Investments, an Italian investment bank, said Chinese manufacturing is moving toward the upstream industrial chain, which "is an inspiring improvement".

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