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MBA Forum Recap: Prof. Huang Yiping on New Economic Growth Mode

Feb 23-2023   



In one of the recent MBA forums of the NSD, Prof. Huang Yiping shared his observations and thoughts on China’s macro-economic outlook in the short term and the shift in economic growth mode in the long run. He’s Deputy Dean of the NSD and Director of PKU Institute of Digital Finance.

 

Contracting demand, supply chain shocks, and weakening expectation beset China’s economy in 2022, said Prof. Huang. He believed the economy will pick up steam in 2023 following the macro policy adjustment and shift made by the Central Economic Working Conference concerning four factors: the real estate industry, the platform economy, monetary policy, and fiscal policy.

 

Investment remains a key driver of growth, while export is confronted with significant challenges. Consumption needs to step up, but Prof. Huang only had limited optimism, pointing out that its growth rate lags behind that of the economy and is yet to become a major driving force of economic growth. The so-called ‘revenge consumption’ might materialize among high-income groups or in certain consumption categories, but ordinary consumers are unlikely to splash out as they continue to cope with pandemic-induced low income, unequal income distribution, and imperfect social security system.

 

Overall, China will see improvement in its macro-economic conditions, but on the micro-level, such as households and SMEs, difficulties will persist, said Prof. Huang. As the economy moves into a new development stage, it calls for a new development mode, one that features high-quality growth driven by efficiency improvement and technological advancement. The dual-circulation economic pattern laid out by top decision makers takes into account the decrease of openness in global markets and the increasing heft of the Chinese economy. Innovation sits at the heart of new economic growth mode because of its critical role in sustaining the continuous growth of supply. In terms of demand, which consists of investment and demand, the former remains strong and the latter needs to play a bigger role. If consumption were to reach 75% of China’s GDP, on a par with Japan and still lower than the 82% of the UK and the US, it would have tremendous impact on both the Chinese and global economy.

 

For it to happen, Prof. Huang proposed some measures, including raising the share of residential income in primary distribution, enhance equality in income distribution through secondary distribution policy, build a sound social security system, and push forward urbanization. He also advocated transitioning to green, innovation-based, digital economy and harnessing the synergy of the market, the entrepreneurs, and the government.

 

MBA Forum Recap: Prof. Huang Yiping on New Economic Growth Mode

Feb 23-2023   



In one of the recent MBA forums of the NSD, Prof. Huang Yiping shared his observations and thoughts on China’s macro-economic outlook in the short term and the shift in economic growth mode in the long run. He’s Deputy Dean of the NSD and Director of PKU Institute of Digital Finance.

 

Contracting demand, supply chain shocks, and weakening expectation beset China’s economy in 2022, said Prof. Huang. He believed the economy will pick up steam in 2023 following the macro policy adjustment and shift made by the Central Economic Working Conference concerning four factors: the real estate industry, the platform economy, monetary policy, and fiscal policy.

 

Investment remains a key driver of growth, while export is confronted with significant challenges. Consumption needs to step up, but Prof. Huang only had limited optimism, pointing out that its growth rate lags behind that of the economy and is yet to become a major driving force of economic growth. The so-called ‘revenge consumption’ might materialize among high-income groups or in certain consumption categories, but ordinary consumers are unlikely to splash out as they continue to cope with pandemic-induced low income, unequal income distribution, and imperfect social security system.

 

Overall, China will see improvement in its macro-economic conditions, but on the micro-level, such as households and SMEs, difficulties will persist, said Prof. Huang. As the economy moves into a new development stage, it calls for a new development mode, one that features high-quality growth driven by efficiency improvement and technological advancement. The dual-circulation economic pattern laid out by top decision makers takes into account the decrease of openness in global markets and the increasing heft of the Chinese economy. Innovation sits at the heart of new economic growth mode because of its critical role in sustaining the continuous growth of supply. In terms of demand, which consists of investment and demand, the former remains strong and the latter needs to play a bigger role. If consumption were to reach 75% of China’s GDP, on a par with Japan and still lower than the 82% of the UK and the US, it would have tremendous impact on both the Chinese and global economy.

 

For it to happen, Prof. Huang proposed some measures, including raising the share of residential income in primary distribution, enhance equality in income distribution through secondary distribution policy, build a sound social security system, and push forward urbanization. He also advocated transitioning to green, innovation-based, digital economy and harnessing the synergy of the market, the entrepreneurs, and the government.