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Can China Smoothly and Successfully Shift to a Sustainable Growth Model

Can China Smoothly and Successfully Shift to a Sustainable Growth Model. Andong Zhu Tsinghua University. Outline. Introduction The Growth Models in the past 30 yeas Opportunities and Challenges to New and Sustainable Model Conclusion. Introduction: From Old China to New China. Semi-Feudal

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Can China Smoothly and Successfully Shift to a Sustainable Growth Model

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  1. Can China Smoothly and Successfully Shift to a Sustainable Growth Model Andong Zhu Tsinghua University

  2. Outline • Introduction • The Growth Models in the past 30 yeas • Opportunities and Challenges to New and Sustainable Model • Conclusion

  3. Introduction: From Old China to New China Semi-Feudal Semi-Colonial Backward Independent Economic & Social Construction Balanced Market-Oriented GDP Growth Fast Income Inequality Social Development Environment Sustainable (Economic, Social, Environment) Development 1949 1978 2002 or 2009?

  4. A Family in the “Old China”

  5. 1948: Hyper-inflation in China

  6. The Achievements of New China before 1978 • Preliminarily Industrialized the Economy • Established a Independent and Comprehensive Industrial system • GDP Growth Rate Averaged at 6.68% per year during 1953-1978 • Life Expectancy increased from around 35 to about 67 years.

  7. The Growth Models of New China 2.0 • Achievements • Evolvement of the Growth Models • Problems

  8. Fast GDP Growth

  9. Huge Amount of Foreign Reserves

  10. Evolvement of the Growth Models Relatively Balanced/Outward Looking Growth Imbalanced/outward Looking Balanced/Inward Looking Growth New growth model? Planned Economy With Market Mechanism Marketization; Privatization Liberalization Over-dependent On International Market And Investment Sustainable (Economic, Social, Environment) Development 1978 1992 2001 2009

  11. The Over-dependency on Investment

  12. The Consumption Ratio in China

  13. Widening Income Inequality • Sweden 25, India 32.5, United States 40.8, • China 44.7, Brazil 59.1

  14. What are the Major Reasons of Inequality in China？ Monopoly? Corruption? Privatization? Ownership  Income distribution Ownership  Labor Relation  Income distribution

  15. The Laid-off/privatization Movement(Mn)

  16. Informalizing Labor Market

  17. What New Growth model Needed in the Chinese Economy? • Balanced/sustainable Economic development • Less depend on international Market • Less depend on Investment Increasing Private Consumption increasing income of the poor & improving the Social Security Net (re-)nationalization of enterprises; more strictly regulate the market

  18. Opportunities and Challenges to New Model • Opportunities • The Drain Up of the Rural Labor Reserves • The Current Crisis (International Market; US Model; Theory, etc) • Challenges

  19. Low External Debt Risk

  20. Enough Room for Fiscal and Monetary Policies At the end of 2007，total public debt was RMB3.4 Tr.，as 13.8% of GDP and 67.0% of government revenue

  21. The Composition of the 4 Tr. RMB Stimulus Plan

  22. Conclusion • The growth pattern of China has to be changed even without this current Crisis • It will not be Easy to transform China to a really Sustainable Development Model Smoothly and Successfully

  23. Comments and Questions Welcome!Thank You!

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