Re­forms to bring fur­ther growth, ex­perts say

China Daily (Canada) - - BUSINESS - By FU JING in Davos, Switzer­land fu­jing@chi­nadaily.com.cn

China’s com­pre­hen­sive re­form port­fo­lio, if im­ple­mented ad­e­quately, can bring the na­tion an­other two decades of high eco­nomic growth, a se­nior econ­o­mist said on Thurs­day.

“China will fur­ther boost its eco­nomic growth, which used to rely on an am­ple sup­ply of cheap la­bor, through struc­tural re­forms,” Cai Fang, di­rec­tor of the In­sti­tute of Pop­u­la­tion and La­bor Eco­nom­ics of the Chi­nese Academy of So­cial Sciences, told China Daily on the side­lines of the on­go­ing Davos fo­rum in Switzer­land. “I be­lieve China can main­tain an­other two decades of high eco­nomic growth through com­pletely un­leash­ing its re­form div­i­dends.”

Cai said that he agreed with Justin Lin, an­other fa­mous Chi­nese econ­o­mist from Pek­ing Univer­sity and for­mer chief econ­o­mist of the World Bank, when Lin said that China will see av­er­age an­nual growth of 8 per­cent in the com­ing 20 years.

“The po­ten­tial is still there, and achiev­ing such a goal will highly rely on how we im­ple­ment our mar­ket-ori­ented re­form pack­ages and how we avoid mak­ing big mis­takes in the fu­ture,” said Cai, who is also a mem­ber of the Stand­ing Com­mit­tee of the Na­tional Peo­ple’s Congress of China and of the Bei­jing-based ma­jor think tank 50 Chi­nese Econ­o­mists Fo­rum.

Ac­cord­ing to Cai, China’s la­bor sup­ply of peo­ple aged be­tween 15 and 59 be­gan to de­crease in 2010, which means the coun­try’s “pop­u­la­tion div­i­dend” has be­gun to de­crease.

Cai added that this do­mes­tic trend is the ma­jor fac­tor be­hind China’s lower GDP growth rate, which stood at 7.7 per­cent last year, be­low the av­er­age of the last 35 years.

To fur­ther boost eco­nomic growth rate, Cai said the coun­try should ac­cel­er­ate the pace of its ur­ban­iza­tion drive and of the re­form of the house­hold regis­tra­tion sys­tem, which would create more jobs for ru­ral res­i­dents in cities.

But Cai added that the most im­por­tant thing is to in­crease the pro­duc­tiv­ity and com­pet­i­tive­ness lev­els of China’s com­pa­nies and la­bor force.

Based on his re­search, Cai said that China can only achieve 7.6 per­cent GDP growth an­nu­ally in the 2011-2015 pe­riod and 6.2 per­cent GDP growth in the 2016-2020 pe­riod if the coun­try doesn’t im­ple­ment ma­jor re­forms.

Af­ter 2020, the an­nual growth rate would be around 3.5 per­cent in a busi­ness-as-usual sce­nario.

Mean­while, Liu Xiaoguang, the pres­i­dent of the Bei­jing Cap­i­tal Group, said in Davos that China’s ap­proach to its re­form agenda is promis­ing and should be en­cour­aged.

“It’s cru­cial to en­cour­age ev­ery eco­nomic unit and grass­root govern­ment to par­tic­i­pate in these en­deav­ors,” said Liu.

Lin Bo­qiang, a pro­fes­sor at Xi­a­men Univer­sity in Fu­jian prov­ince, also said at the meet­ing that China’s re­form process should be com­bined with the trans­for­ma­tion of its de­vel­op­ment model and mea­sures to curb pol­lu­tion.

“I’m quite con­cerned about the fact that pol­lut­ing in­dus­tries are in­creas­ingly mov­ing to the cen­tral and western parts of China,” said Lin.

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