Domestic consumption and industrial restructuring can sustain country's future economic development
This year is destined to be of vital significance to China, because its traditional growth model has reached a turning point. It is now entering a period in which much can be achieved if it successfully upgrades its industrial structure, improves the quality of its labor force, promotes technological innovation and pushes ahead with system reform.
To do this requires a correct understanding of the changing international and domestic environments, so the country can respond effectively to the current challenges and gain new advantages to replace the dwindling dividends of its export-driven growth model.
China's gross domestic product last year was about 2.5 times that of 2002, while the average GDP per capita had increased 2.4 times. General Secretary of the Communist Party of China's Central Committee Hu Jintao stated in his report to the 18th National Congress, that by 2020, on the basis of making China's development more balanced, coordinated and sustainable, the GDP and per capita income for both urban and rural residents should be double that of 2010.
To realize this goal, China will have to maintain an annual growth of 7.2 percent. But there are some big challenges to overcome if it is to maintain such high-speed growth.
China's fast development over the past 30 years has been propelled by cheap labor, huge savings and large scale investments, which has resulted in a widening income gap and low consumption level. Gross national savings accounted for 38 percent of China's GDP in 1978, but they are now around 45 percent, the largest in the world.
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