Business / Economy

Rebalance 'less important' than innovation

By Li Yang (China Daily) Updated: 2014-03-20 07:28

China's economy needs a new source of momentum, not a rebalancing as so many analysts claim, senior economists at Peking University said.

Infographic: Five key words from Li's govt report

Yuan exchange rate's floating range widened

After the 2008 global crisis, when the government launched a stimulus package of 4 trillion yuan ($666 billion), critics of China's dependence on exports pointed to the nation's weak consumption and reliance on investment-driven growth.

Two consistent views on China have developed overseas, both based on the idea of imbalances.

On the one hand, there are commentators such as New York Times columnist Paul Krugman, representative of the pessimists. He has argued that the Chinese economy will eventually crash, and all the Chinese government can do is determine the intensity of the crash.

On the other hand are such analysts as Steven Roach of Yale University, who is optimistic about the future of the Chinese economy. He has admitted there are imbalances, but these, he said, are being addressed quickly.

But neither the pessimists nor the optimists question the economic data on which they base their arguments. Some domestic experts believe that the statistics themselves are misleading.

Cai Hongbin, dean of the Guanghua School of Management at Peking University, said that Chinese consumption has long been seriously underestimated.