Slow growth will test China's new leaders: Economists

[Matrixx]

Economic slowdown will be a defining feature for China in the coming decade, testing the wisdom of its new leaders and shaping future diplomacy as the economy is expected to decelerate to 7.2 per cent in the next 13 years, top economists said on Sunday.

China's economic expansion is expected to slow to a year-on-year average of 7.2 per cent between 2011 and 2025, Li Xuesong, deputy director of the government sponsored Institute of Quantitative and Technical Economics, Chinese Academy of Social Science (CASS), said.

During a presentation at the ongoing 5th World Forum on China Studies in Shanghai Li's econometric models forecast slower GDP growth than the country's 13-year low of 7.8 per cent in 2012.

"Optimistic calculations suggest growth at 8.2 per cent, while a pessimistic one suggests 7 per cent, between 2011 and 2015, and both figures will continue to decline over the next two five-year periods," Li said.

The downturn can be put down to slower growth of the labour force, weak inflow of foreign direct investment and the impact of a lackluster global economy, according to Li.

China's GDP growth has entered a downward spiral since 2009 as the unfolding financial crisis dwindled external demands, a prominent engine behind the country's fast-track development in past decades.

Experts said the economic slowdown may threaten social stability and cloud the pledges of President Xi Jinping, who came into office earlier this month, to restore social justice and close the wealth gap.

"I think the most immediate challenge for China is to make a successful transition from an export-driven economy to a consumption-driven one, which will turn on the true engines of China and the world economy," Gustaaf Geeraerts, director of the Brussels Institute of Contemporary China Studies, told state-run Xinhua news agency.

Geeraerts said a stumbling economy will weaken China's ability to tackle other problems like environmental protection and political reforms.

Growing wealth, he said, can help nurture innovation and liberal minds that are conducive to social reforms.

Slow growth will test China's new leaders: Economists - The Times of India

 

[Chinese-Dragon]

Economic slowdown will be a defining feature for China in the coming decade, testing the wisdom of its new leaders and shaping future diplomacy as the economy is expected to decelerate to 7.2 per cent in the next 13 years, top economists said on Sunday.

If we can maintain 7.2% average growth for the next 13 years I will actually be very happy with that.

Remember that our base economic size is now 8.3 trillion. So in actual terms, with 7-8% real growth we are now adding far more to our economy, compared to when we were growing at 12-14% in the 2004-2007 period.

 

[djsjs]

no no no,it is so easy to keep high growth in China,just building some more buildings or more roads,but it is not what we need most currently.we need upgrade our economy structure to support a new round of high growth

 

[Matrixx]

If we can maintain 7.2% average growth for the next 13 years I will actually be very happy with that.

Remember that our base economic size is now 8.3 trillion. So in actual terms, with 7-8% real growth we are now adding far more to our economy, compared to when we were growing at 12-14% in the 2004-2007 period.

I agree with you but adding same as 2007, will it be enough with bigger economy

 

[Chinese-Dragon]

I agree with you but adding same as 2007, will it be enough with bigger economy

7% should be exactly right.

I remember some high-profile Chinese professor calculated that for our population size, we need around 7% real GDP growth per annum to absorb all the young people coming into the labour force every year.

Official growth target is currently 7.5%, and our actual growth rate was 7.8% for 2012. Expected to increase in 2013 onwards, and then fall again towards the latter end of the decade.

 

[Jade]

I think for China, growth doesn't matter much if it growing above a certain threshold growth rate. What matters more is from where is the growth coming from.

 

[Chinese-Dragon]

I think for China, growth doesn't matter much if it growing above a certain threshold growth rate. What matters more is from where is the growth coming from.

Yep, we are already in the process of changing where our growth is coming from.

China unlocks right kind of growth - Financial Times

October 18, 2012 2:26 pm

China has never lacked for growth over the past decade but it has suffered from the wrong kind of growth, developing a dangerous reliance on investment.

Tucked into its latest economic data was evidence that the country has finally started to address this problem. Consumption clearly surpassed investment as China’s biggest growth engine, reinforcing a trend that emerged earlier this year – and something that has rarely happened over the past decade.

In the first three quarters, consumption accounted for 55 per cent of growth, while investment contributed 50.5 per cent. With external demand weak, net exports actually subtracted 5.5 per cent, according to data from the national statistics bureau.

Consumption now contributes most to our GDP growth. While Net exports are actually subtracting from growth in recent years.

 

[UKBengali]

If we can maintain 7.2% average growth for the next 13 years I will actually be very happy with that.

Remember that our base economic size is now 8.3 trillion. So in actual terms, with 7-8% real growth we are now adding far more to our economy, compared to when we were growing at 12-14% in the 2004-2007 period.

China is too large and too "rich" now to grow at double digit till 2025. It cannot rely on rapid export growth as there is not enough demand in the rest of the world and it will become harder to grow just by adding in physical infrastructure as that deficit is a lot less than it was a decade ago.

Even at 7.2% a year the "catch-up" with the West will be at pretty much same rate as Western countries are likely to do no better than 1% a year anyway.

In the end China becomes as rich as the West combined.

 

[Jade]

Yep, we are already in the process of changing where our growth is coming from.

China unlocks right kind of growth - Financial Times



Net exports are actually subtracting from growth in recent years.

Yes China should look at getting much of its growth from productivity factors. Growth from productivity factors actually increases the production possibility frontier of an economy there by making growth more sustainable for a longer period.

 

[Chinese-Dragon]

Yes China should look at getting much of its growth from productivity factors. Growth from productivity factors actually increases the production possibility frontier of an economy there by making growth more sustainable for a longer period.

The new Xi-Li Administration should be exactly what we need right now.

I feel they will bring some good economic reforms in the next few years. Li Keqiang in particular.

 

[PITA]

The new Chinese economy is going to be about making higher end products. The only thing I want to see is a continued high rate of savings. That translates to building business and opportunities. Also, more engineering and science so China can be competitive in making and developing these products. A lower growth is natural, since we will not be mass producing lower end goods as much anymore.

Also, it's more important to get a bigger share of the pie than to look at absolute numbers.

 

[qinglong-china]

, Too many experts predict that China's economy in the past, but Almost no one are right. Causing the Chinese meaning of expert to be an man throw a brick. I want to know how many bricks the export in the thread throw to chinese economy.

 

[Sanchez]

China needs a break to adjust her economic structure and to shift the growth hot spots of her economy. I don't see any slowdown but adjustment.

 

[cirr]

Slow growth？

What slow growth？

We are growing 8% plus annually while the rest of the world is on its knees。

And we are growing 8% plus with the most stringent real estate control policy in place。

And restriction on auto purchase。（A licence plate sells for 100,000 yuan in Shanghai，while Beijing is lottery！Same for Guangzhou。。。）

Urbanization and huge investments in environmental protection and cleaning will ensure that China achieve average anuual REAL growth of 8% or more for at least the next 10 years。

Your time would be better spent worrying about your own growth，or lack of it！！！

 

[tranquilium]

7% should be exactly right.

I remember some high-profile Chinese professor calculated that for our population size, we need around 7% real GDP growth per annum to absorb all the young people coming into the labour force every year.

Official growth target is currently 7.5%, and our actual growth rate was 7.8% for 2012. Expected to increase in 2013 onwards, and then fall again towards the latter end of the decade.

That is true until 2011. The one child policy's population stabilization effect started to kick in. As a result, China no longer NEED to maintain 7%+ growth. Of course, good growth is still much appreciated.
Balancing the GDP is a tricky business. Too low, you have unemployment problems, too high, you may trigger high inflation. Personally, I think 7-8% for the next decade or so looks right.