Leap­ing from ‘Big to Strong’

As China en­ters its high-qual­ity growth phase, the in­sti­tu­tional en­vi­ron­ment will play an in­creas­ingly cru­cial role

NewsChina - - COVER STORY - By He Bin

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

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