Business / Opinion

Experts: GDP growth target reasonable

By Song Jingli and He Yini ( Updated: 2014-03-05 10:55

Experts: GDP growth target reasonable
 Experts: GDP growth target reasonable


















The central government sets such a target to send signals to local governments and all economic policy-making institutions, including the central bank, that they do not need to focus merely on growth rates. As China is a country where the state has great power, if the central government sets the target at eight percent, local governments may set targets higher than eight percent and policy-makers may feel pressed and take measures to stimulate the economy.

The goal is in line with China's actual situation as the country is still in the process of restructuring, which will take some time.

It is dangerous for a country's economy to aim for a high growth rate when it is searching for balance. It is also not possible for it to develop very fast as changes do take time.

China's restructuring mainly takes place in two areas. One is within the manufacturing industry itself, which will lead to many mergers and acquisitions.

The other is between the manufacturing industry and the service industry. Large and strong manufacturers also need to tap into the service industry to find room for growth, which means these companies need to upgrade their ability in designing, marketing, brand building and the need to provide new services, which can add more value to their customers. However, these corporate capabilities cannot be built up in short time either.

In mature economies, the service industry takes up 70 percent of the whole economy but in China, the percentage is still less than 50 percent. This means there is still development room for China.

China is still in a take-off process and the problems it faces nowadays are specific to this process.

When China finishes restructuring, it may come back on the faster development track.

Hai Wen, former vice president of Peking University and also dean of HSBC Business School


Experts: GDP growth target reasonable
















Achieving the target of 7.5 percent growth rate will not be a problem for China as it has a large domestic market, its economy has been growing at high speed for the past 30 years and the global economy is showing signs of bouncing back.

But the key lies in the growth model.

If China continues to rely on investment-fueled growth model, Premier Li Keqiang's target will not be met. The premier has said that the government has set the 7.5 percent target to boost confidence, employment and income.

But under the old model, the benefits of growth will mainly go to the government in the form of fiscal revenue and to the banks as capital gains and to the local government in the form of land revenue. This kind of growth has limited role in boosting employment, especially of college graduates, increasing property income or benefiting small and medium-sized enterprises.

Only if the growth rate is achieved by relying on labor, innovation, and private financing, the government will be able to achieve its aim to boost employment, income and confidence.

If the stock and bond markets are efficient and Internet finance sector is running well there will be more investment opportunities and incomes for the private sector.

If both deposit and lending rates are freed, households will get more income from savings.

If land and tax costs and government charges are lowered, small and medium-sized enterprises will have more opportunities to set up new business and to expand. The government also needs to boost the service sector and labor-intensive industries to expand the share of labor income in the whole national income.

Zhu Chenggang, CPPCC member, deputy chief of Shanghai's Xuhui district


Previous Page 1 2 Next Page

Hot Topics

Editor's Picks