Economists remain optimistic about Chinese growth
Updated: 2014-01-07 08:34
By By AMY HE in New York (China Daily USA)
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Despite sluggish GDP growth in 2013 and recurring stresses in the Chinese financial system, Chinese economists remain optimistic about growth prospects in 2014.
"In spite of all the talk of debt in China, in effect, total debt — including central government and local government — was only 39.4 percent," said Justin Yifu Lin, professor and honorary dean at the National School of Development (NSD) at Peking University. Lin made his comments on Monday in a keynote address at the National Committee on United States-China Relations’ 2014 economic forecast event.
"China has 50 percent of savings. China also has $3.7 trillion US dollars on reserve," he said at the event held at the New York Stock Exchange. "You put those conditions together and I'm sure China will be able to easily maintain a growth rate between 7.5 to 8 percent in the coming few years."
Not just in the coming few years, but perhaps as far off as the next15 years, Lin predicted. He said China adopted a "dual-track approach" that helped the country maintain its growth rate, on the one hand providing "necessary transitional subsidies" and protection to various sectors to avoid collapse, and on the other granting liberalization in some aspects of the economy.
"This approach, as you know, allowed China to achieve, on the average, 9.7 percent growth rate continuously for 35 years; it's a miracle in the human history," Lin said. "We never observed such a long sustained period of high growth in any country in any time in any part of the world."
Lu Feng, director of the China Macroeconomic Research Center at Peking University, predicted that China was likely to maintain growth rate of 7.5 percent to 8 percent this year, about 12 percent to 13 percent measured in US dollars.
"Last year, incremental growth of China's GDP measured in US dollars is something like $950 billion US dollars, which is equivalent approximately 30 percent of estimated global economic growth," Lu said. He added that China is likely to maintain the status of the biggest contributor to the global economy this year and "many years to come."
Huang Yiping, deputy dean and professor of the NSD at Peking University, took a more cautious stance on the health of the Chinese economy. He estimated the country's growth potential to be between 7 percent and 8 percent, but said that the government's bottom-line estimate of 7.2 percent is "way too high." As the labor force shrinks, growth also slows, as reflected by the 7.3 percent growth in the second quarter of 2013, he said.
There was "no major unemployment problem, so my own sense is target is okay — 7.5 or 7, it doesn’t matter — but the bottom line should probably be lower, so that you can have more scope to push ahead with the reform," he said.
He also said that the Chinese economy will show "much more volatile economic cycles" in the future, but added that this is "simply a normal feature of the market economy."
For investors, however, Huang advised against betting on China's collapse. "For the past year, we've seen waves of warnings of crisis happening in China related to property price, shadow banking, and a number of others," he said. While that doesn't mean risks should be ignored, investors should watch out for them while being careful about "the fundamentals" as well as China's balance sheet and reform momentum.
"Looking at risk is okay, but don’t miss lots of investment opportunities," he said.