Over the past year, the housing price in many Chinese cities has doubled. The property industry, which contributed to the economy’s growth, is now ‘hijacking’ China’s economic growth model. Instead of investing in real businesses, individuals and companies are betting on increasing property prices. In this interview, Professor Xu Chenggang talks about the government’s role in real estate regulation, the major challenges of pushing reforms in China and how state-owned enterprises and local governments should roll out these reforms.
China’s economic growth over the past few decades has impressed the world. But the world’s second largest economy now faces a difficult transformation: from relying on exports and investments to developing domestic demand. That’s not easy. Government-led stimulus is only a temporary solution and only looked reasonable in the first few years after the recent global financial crisis. In fact, the main problem facing the Chinese economy has been the weak demand in domestic market which manifested clearly in 2006, and became more obvious when growth slowed down.
China’s longstanding reform program has failed to keep up with the pace of change in this vast nation. The enormous impact on growth of joining the World Trade Organization has now largely played out, and the path towards developed economy status—while avoiding the so-called middle income trap—depends upon careful management of an extensive program of economic reform. In November 2013 at the Third Plenum of the 18th Central Committee, a grand total of 60 reform proposals were outlined, affecting almost every aspect of the economy. Over two years have passed since. We take stock of just how much progress been made.
China’s economic growth has dropped to a 24-year low. There’s not much room for further decline as Beijing has reaffirmed its goal of doubling the GDP between 2010 and 2020. This means growth of 6.5% a year. The conventional methods of boosting growth are no longer deemed dependable. Beijing is now pinning its hopes on unlocking another round of “economic dividends” by carrying out reforms to make the entire system more market-driven. But can China carry out economic transformation without hurting growth? We ask Anthony Saich, Director of the Ash Center for Democratic Governance and Innovation at Harvard Kennedy School.
The heady days of double-digit economic growth rates are now history in China, and even achieving 7-7.5% growth is unthinkable. The stock market has been on a roller coaster ride. The Renminbi has fallen dramatically and the trade numbers are down too. Li Wei, Professor of Economics at CKGSB, feels that to solve this China must implement structural reform. The downside: it will be painful. The upside: the Chinese economy will be better off in the long run.
A common view of China’s central planning is that it has failed; since China grew faster when its reforms replaced planning with markets, the sooner China gets rid of Five Year Plans the better. This view is rather simplistic. Evidence shows that the Five Year Plans have played an important role in China’s progress. It was the fastest way for China to mobilize capital and labor for industrialization. And when China transitioned from a planned to a market economy and the two worked in parallel, it maintained employment, livelihoods, infrastructure and the supply of basic goods, hence a stable foundation for the nascent market economy.
The Chinese economy is slowing and that has significant ramifications for things like capital and the Renminbi. Is there a silver lining in all this?
A year on from its debut, we examine the hits and the misses of the much-touted Shanghai Free Trade Zone.
Carnegie Endowment’s Yukon Huang offers a new perspective and demystifies some popular notions about China, such as fears about the real estate bubble.
The popular notion is that state-owned enterprises are very powerful in China. To what extent is that true? Are fears of China’s state capitalism overblown?