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The Shape of China’s Future Growth

The Shape of China’s Future Growth. KC Kwok 8 September, 2008. Many of the success factors have/about to run their course. Low cost, export-led growth Investment-led growth Emphasis on manufacturing Catching up with technology Quantitative expansion, crude growth Growth comes first

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The Shape of China’s Future Growth

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  1. The Shape of China’s Future Growth KC Kwok 8 September, 2008

  2. Many of the success factors have/about to run their course • Low cost, export-led growth • Investment-led growth • Emphasis on manufacturing • Catching up with technology • Quantitative expansion, crude growth • Growth comes first • The capacity of the world to accommodate China’s growth

  3. Unbalanced economy • Increasing disparity between • urban and rural • the east and the west • haves & have-nots • Investment driven growth • Dominance of public sector • Environmental degradation • Increasing trade surplus and foreign reserves

  4. From “Fast & good quality” Low cost as competitive edge Emphasis on manufacturing Attracting in Economic growth comes first To “Good quality & fast” Raise innovative capability Improve economic structure (develop services industries) Going out Harmonious society; improve citizens’ livelihood; enhance administrative capabilities Changing the mode of economic development

  5. Key ongoing reforms • Further administrative reform • Fiscal and taxation reform • Financial market reform • SOE reform & facilitating non-state sector development • Development of factor markets • Build up social security system • Incentive system for environmental improvements

  6. Financial market reform & development • Financial market reform & development lagging behind rest of the economy - costs and risks • Benefits of financial market development • Role of Hong Kong • Relationship between HK & Shanghai • Other financial centres

  7. Need to grow the private sector • Public sector still getting a disproportionate share of China’s growth • SOE dominance in many sectors • rising share of government revenue in GDP • rises in asset value accrue largely to public sector • The development of private sector helps to • improve efficiency • increase private investment • increase consumption of services

  8. Regional development • Yangtze River Delta • Pearl River Delta (Pan PRD) • Bohai region • Revitalizing the Northeast • Developing the West • Rise of the middle • Taiwan Strait economic region • Other sub-regions

  9. Medium-term growth drivers • Demand side drivers • Quantitative and qualitative improvements in consumption • Urbanization • Investment in infrastructure and industrial upgrading • Supply side drivers • Further liberalization of economy • Economic re-structuring • Further reform of government

  10. Guangdong-HK economic integration • complementary economic relationship under“one country, two systems” • momentum for further cooperation • GD’s economy is at a turning point • GD is HK’s market, hinterland & possibly conduit for the rest of China • HK is Guangdong’s international contact • HK’s services capabilities could help GD to restructure its economy • HK’s public services are something GD could learn from

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