An economic researcher from the Chinese Academy of Social Sciences says China must give up the breakneck growth rate it’s maintained since the turn of the century in order to enable economic and political reforms to take place.
Zhang Zhuoyuan writing for Caixin says that the continued pursuit of double digit GDP growth in China would have an adverse effect upon efforts to reform the current system, as well perpetuate deficiencies which the country’s staggering growth has engendered, including environmental degradation, stark wealth disparities, and a gross imbalance between investment and consumption.
According to Zhang China as a major economy should strive to maintain an economic growth rate of around 7% in the near-term. If China manages to maintain this growth rate until 2020 Zhang believes no major societal problems will arise as the country is still at the stage of industrialization and urbanization.
This pronouncement marks a stark departure from the conventional wisdom which has reigned throughout the past decade of the Hu-Wen administration, which dictates that a growth rate of at least 8% is needed to ensure social stability.
Zhang feels that in future China’s economic development should place just as much emphasis upon quality as quantity, and that some easing of the GDP growth rate will permit much-needed reforms to be implemented.
These reforms would include structural adjustments to the economy and changes to China’s development model. Even more important in Zhang’s view are reforms of the Chinese government, as well as the country’s monopolized industries and inequities in wealth allocation.
According to Zhang “the distinction between the government and the market must be clear, and anything which the market can do well and effectively should be left for the market to perform. The government should mainly engage in economic adjustments, supervision and administration of the market and society, and the provision of public services.”