Leaping from ‘Big to Strong’
As China enters its high-quality growth phase, the institutional environment will play an increasingly crucial role
During the 19th National Congress of the Communist Party of China (CPC) in October 2017, Chinese President Xi Jinping said that China's economy is in transition from a phase of rapid growth to one of high-quality growth.
“We should work hard for better quality, higher efficiency, and more robust drivers of economic growth through reform,” he said.
High-quality growth is now the fundamental requirement to determine China's development path, policymaking, and macroeconomic regulations in order to sustain healthy and stable economic growth.
Wang Yiming, deputy director of the Development Research Center of the State Council, who is a member of the Chinese People's Political Consultative Conference, gave an exclusive interview to Newschina during China's top legislative meetings, the two sessions, in Beijing in March. He shared his views on the role of high-quality growth in the Chinese economy, the background to the policy change and the challenges and solutions.
Newschina: What does high-quality growth mean for the Chinese economy?
Wang Yiming: Since initiating the reform and opening-up policy in the late 1970s, China has maintained rapid economic growth for more than 30 years. “China speed” has impressed the world and won acclaim worldwide. However, we also noticed that the quality of China's economic growth has a large gap with developed countries in fields like industrial products, services, industrial chains and efficiency.
In the early 1980s, the main task of the Chinese economy was to address the deficiencies in industrial products. Nowadays, that problem has been solved – but oversupply is present in many sectors. China has become the second-largest economy in the world, taking the lead in production capacity in more than 220 industrial and agricultural sectors.
Solving the problem of quality has great potential for the development of the Chinese economy. The transition to high-quality growth will make China leap from a big economy to a strong economy.
NC: China's supply-side reforms have made some progress. In which aspects should we deepen reform in order to attain highquality growth?
WY: China's supply-side structural reform has played a crucial role to address over-production in the steel and coal industries, and reduce real estate inventory in many Chinese cities. The corporate leverage ratio has been declining steadily, tax reductions have taken effect and public service and infrastructural facilities have improved. At a time when the allocation of resources has continued to improve, new technology, and new industrial and business models have developed rapidly in sectors such as mobile payments, e-commerce, high-speed train networks, bike shar- ing and new energy automobiles, which are at a world-class level.
Nevertheless, the conditions, challenges and tasks of transitioning to the quality development phase are very different from the past, and it will be difficult to adapt to the new environment – it's like a train changing its tracks.
NC: China's economy is expected to grow at 6.5 percent in 2018. As China is on track to high-quality growth, will its economy slow down?
WY: Since 2011, China's GDP growth has shrunk from a double-digit growth rate. In 2017, China's GDP growth rate was 6.9 percent, seeing an increase of 0.2 percent yearon-year, which was the first rebound since 2011. China's economy has reached a relative equilibrium.
From an economic perspective, growth is in line with the potential growth rate. I believe China's 6.5 percent GDP growth target for 2018 basically matches the potential growth rate in terms of economic structure, quality and efficiency, and the economic growth rate will fluctuate within a small range of the potential growth rate.
China's gross domestic product totaled 82.7 trillion yuan (US$13T) in 2017. Against the backdrop of its overall huge economic volume, an increase of one percent is a totally different concept in comparison with previous years. The medium and long-term trend is an economic slowdown, but the economic