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Reflections on Some Major Current Economic Issues in China

Nov 19-2024   



By Prof. Yiping Huang

 

How to Understand the Important Changes in the New Stage

There are three changes in China's new stage of economic development that deserve great attention. First, the cost advantage is changing. China's cost level has risen, and the low - cost advantage no longer exists. Second, the international market environment is changing. Over the past 40 years, exports and direct investment into China have played a big role in China's economic growth, but now these two pulls are facing increasing difficulties. Third, demographic structure changes. An ageing population is a major challenge.

In addition to these three areas, digital technology and green development are also important changes. In the future, a shift in the growth model will rely on innovation, domestic markets, digital technology and changes in existing policies. The core of shifting the growth model is to change from the past extensive growth based on the advantage of low-cost to innovation-driven growth.

 

How to Improve Innovation Capacity

The first factor is the level of our country’s opening up to the world. In the current complex international environment, fostering innovation capacity requires a deep understanding of the importance of maintaining openness. The second factor is the dynamism of private enterprises. What should be done now to enhance and maintain the confidence of entrepreneurs, especially private entrepreneurs, is indeed an important challenge.

 

How to Understand the New Overcapacity Problem

Overcapacity has been a long-standing problem in China. And now the overcapacity is more complex, there are two main reasons. The first reason is the increasingly prominent geopolitical conflicts. The second reason lies in policy. Industrial policy is very important, the future of central and local governments to support industrial development should focus on overcoming technical bottlenecks, the key is to support technological innovation.

 

Which Is More Important, Consumption or Investment?

For a long time, our country’s economic growth was driven by investment, and then some scholars proposed to shift from investment-driven growth to consumption-driven growth. The views of economists on this point of view are very inconsistent. Whether growth is driven by investment or consumption, what is important is that there should be a relatively reasonable ratio between investment and consumption.

At present, it seems that China's policies are better at supporting investment and supply, so we can consider changing our policy thinking to support the expansion of consumption, and continuously improve the level of social security and welfare of urban permanent residents, so that the macroeconomics has the potential to rebound.

Reflections on Some Major Current Economic Issues in China

Nov 19-2024   



By Prof. Yiping Huang

 

How to Understand the Important Changes in the New Stage

There are three changes in China's new stage of economic development that deserve great attention. First, the cost advantage is changing. China's cost level has risen, and the low - cost advantage no longer exists. Second, the international market environment is changing. Over the past 40 years, exports and direct investment into China have played a big role in China's economic growth, but now these two pulls are facing increasing difficulties. Third, demographic structure changes. An ageing population is a major challenge.

In addition to these three areas, digital technology and green development are also important changes. In the future, a shift in the growth model will rely on innovation, domestic markets, digital technology and changes in existing policies. The core of shifting the growth model is to change from the past extensive growth based on the advantage of low-cost to innovation-driven growth.

 

How to Improve Innovation Capacity

The first factor is the level of our country’s opening up to the world. In the current complex international environment, fostering innovation capacity requires a deep understanding of the importance of maintaining openness. The second factor is the dynamism of private enterprises. What should be done now to enhance and maintain the confidence of entrepreneurs, especially private entrepreneurs, is indeed an important challenge.

 

How to Understand the New Overcapacity Problem

Overcapacity has been a long-standing problem in China. And now the overcapacity is more complex, there are two main reasons. The first reason is the increasingly prominent geopolitical conflicts. The second reason lies in policy. Industrial policy is very important, the future of central and local governments to support industrial development should focus on overcoming technical bottlenecks, the key is to support technological innovation.

 

Which Is More Important, Consumption or Investment?

For a long time, our country’s economic growth was driven by investment, and then some scholars proposed to shift from investment-driven growth to consumption-driven growth. The views of economists on this point of view are very inconsistent. Whether growth is driven by investment or consumption, what is important is that there should be a relatively reasonable ratio between investment and consumption.

At present, it seems that China's policies are better at supporting investment and supply, so we can consider changing our policy thinking to support the expansion of consumption, and continuously improve the level of social security and welfare of urban permanent residents, so that the macroeconomics has the potential to rebound.