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Chinese economy constrained by 3 factors
www.chinanews.cn 2005-09-22 15:07:48
Chinanews, Hefei, Sept. 21 (By Wu Lan, Li Jinghua) - Famed economist and
Beijing Unirule Institute of Economics director Zhang Shuguang said in
Beijing today that China's economic development has enormous potential,
but is constrained by the three factors of urbanization and large-scale
population movement and small-scale population migration, expanded
opening up and bidirectional recycling and interdependence, structural
changes and unbalanced development of product and factor markets.
In the currently convened "technological innovation in China's middle
region and venture capital international forum", Zhang explained that
China is a populous country with most of its population living in rural
areas. In the process of high-speed urbanization, there will be
large-scale population movement, but small-scale population migration. If
there is no breakthrough in the separation of rural and urban labor
markets, urbanization and the dual phenomena of large scale population
movement and small-scale population migration will be a detrimental
factor to China's economic development.
He said that since economic liberalization started, China has implemented
pro-business and pro-investment policies, leading to super-charged
economic growth that required large quantity of inputs, imported energy
and raw materials need to go through domestic production systems to
complete the output cycle, but the goods produced domestically cannot be
absorbed locally and therefore needs to be exported and needs to
transform from products to money in world markets. The imbalance between
internal and external economy has created the current economic
two-direction recycling and interdependency and is detrimental to Chinese
economic development. Similarly, structural changes and product and
factor market's unbalanced development have the same result.
During this forum, Zhang also predicted that this and next year China's
economy will continue to grow, with steady but declining growth rate,
though the decline will be modest. In terms of prices, deflationary
pressure will be greater than inflationary pressure.
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