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China Has Great Potential for Economic Growth, Say Economists
China's average annual economic growth has gone up 9.6 percent since 1978 when the country first opened up to the outside world. Many experts have discussed and even debated on the factors that have led to China's economic growth over the past two decades. They queried whether it is a short-term situation resulted from increase in input, or a sustained, long-term trend.
After nearly two years of analyses and studies,11 economists including Fan Gang, Wang Xiaolu, He Liping and Zhou Tianyong have completed the research subject titled "The Sustainability and Institutional Change Related to China's Economic Growth". These experts held that high-speed economic growth cannot be summed up in an oversimplified way that "economic increase is driven by increased input". There will still be great potential for growth of China's economy in the next 20 years.
In their report "Sustainability of China's Economic Growth: Cross-century Review and Preview", these experts have made an essential appraisal of China's economy in the past 20 years.
The accelerated growth of domestic investment resulted from rise in savings deposits during the period of reforms, as well as the dramatic increase in foreign investment since the beginning of the 1990s has played a vital role in accelerating economic growth, but the role exerted by rise in efficiency brought about by market-oriented institutional change is more important.
The main factors for the rise in productivity over the past two decades is the re-allocation of large-scale production elements brought about by institutional change, but the particularly important factors are the transfer of rural labor force and other resources from agriculture to township enterprises and the primary and secondary industries in cities and the rapid development of non-State-owned economy.
The speedy growth of foreign investment and foreign trade brought about by the policy of opening to the outside world, enterprise improved efficiency and enhanced incentive resulted from market competition have also made important contributions to technological progress and productivity growth. But technological progress has not as yet become the main driving force for the elevation of productivity. Such being the case, the rapid economic growth already achieved remains mainly a growth of an extensive type.
After 20 years of high-speed development, shortages have been eliminated and the structure of demand is undergoing significant changes. The motive force for the growth of the extensive economy is weakening. Some unresolved structural defects have increasingly become serious obstacles to further growth.. At present, economic growth is faced with major challenges to structural readjustment and industrial upgrading.
According to the economists, China's economy has tremendous potential for growth, and in the 20 years ahead, it can maintain a growth rate noticeably higher than the world average, thereby continuing to narrowing the gap between China and the developed countries.
Economists believe that in the next 20 years, China's economy will continue to develop at a real growth rate of over 6 percent. By 2020 when China's per-capita GDP reaches the average level of the present medium-income countries, China will bid farewell to poverty.
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