Prof. Yao Yang: Chinese Economy in Early Recovery Stage

May 22-2023   

The root cause for private enterprises’ lack of confidence is mainly theoretical backwardness concerning China’s fundamental economic institution, said Prof. Yao Yang, Dean of both NSD and BiMBA, in a recent media interview. Given the prominent role of private firms, it would befit the reality to say that China’s economic institution is a mixed economic mode with private firms as the mainstay and with SOES dominating certain strategic industries, proposed Prof. Yao.

He believed that once the economy grows and corporate profits turn positive in the second half of the year, the private enterprises will see their confidence return. However, Prof. Yao also advised examining the labor value theory to understand the justifiable participation of capital in income distribution.

Though CPI hardly rose in the first quarter and PPI has been in negative territory for months, Prof. Yao believed that the Chinese economy is in an early phase of recovery, buoyed by consumption. Demand is unevenly dispersed among industries; so is export performance. Overall, SOES are having higher profit margins than private ones.

More efforts should be made to beef up the demand side, said Prof. Yao. Real estate and automobile still offer great opportunities for growth. Housing prices can drop further so that inventories can be offloaded and exorbitant prices can be contained. If license plate quota is scrapped, consumers will splurge on new energy cars.

Prof. Yao remained bullish on the Chinse economy, believing that China has occupied the forefront of many global technologies such as electric cars and photovoltaic power. As China continues to build its capacity and capability, it can expect to enjoy a new round of growth driven by technology.