The Search for Momentum towards Economic Growth

The recently announced twochild policy is hailed as a fresh stimulus to the Chinese economy. Although a population increase might be a burden for social and economic development during certain periods of history, it is now a much needed resource. A large population is indeed one of the factors that have buttressed China’s strong economic growth over past years.

Decent growth remains critical to the Chinese economy. Healthy development of businesses and innovation provide a sustainable drive towards economic growth, but are premised on the liberalization of production factors. In this regard metabolizing excess capacity is imperative.

The Internet is perceived as adding impetus to China’s economic restructuring by opening up new space for growth. But IT technologies lead only to changes in the patterns of profit distribution, and not to the institution itself.

Advocates of the “new supplyside economics” believe that institutional supply will be the main dynamic of China’s economic growth. Over the past century the Chinese people have constantly sought economic systems appropriate to national conditions, and encountered numerous ups and downs in the process. Now the world’s second largest economy, China must decide exactly which economic institutions and modes it should embrace in the new era.