Economy

Next decade is China's golden period of development

By Li Daokui (People's Daily Online)
Updated: 2010-08-03 10:50

China's current economy can be summarized with following wording: Its economic situation remains unchanged, economic policy is stable and steady, and the adjustment of its irrational economic structure has been hastened. What merits attention here is that some outcome of the economic restructuring is already available.

First, the economic restructuring in some coastal areas has embarked on a new path by employing new technology and new management approaches to upgrade traditional services, and this modern service industry is booming. Second, the traditional, export-oriented industries in south China's Guangdong province, and the Shanghai area in east China are transferring out rapidly to the interior at very fast paces and, third, consumption has entered a passageway of fast growth.

The rise in the cost of labor poses a new challenge currently facing China and, with a relatively growing labor shortage in rural areas, a decline trend in the share of labor income in gross domestic product (GDP) over the years is expected to reverse shortly.

China's economy will be still in a golden period of development for 10 years ahead, and it will enjoy an annual growth rates in the excess of 9 percent as I have envisaged. And this evolves four major factors:

First is urbanization. China is currently in the period of rapid urbanization with each promoting development of the other. Its current official reported rate of urbanization is 46.8 percent, which is far lower than the average figure for other nations at the same stage of economic growth, specifically to be 11 percent lower in general, and this is a figure with ample potentials. As one travels around China, he or she may find that urbanization is accelerating and resulting in a new round of consumption and construction.

The second factor is the rapid development of China's interior. Some people say that the country will enter a phase of low-speed development. If you look at the Republic of Korea (ROK) and Japan, they were once stagnated for a period of time. However, I suppose, China has a large number of mainland cities, which are usually backward or less-developed, and major mainland markets are yet to be tapped or further developed.

The third factor is the renewal of energy production. This is a tough challenge and also an opportunity for development. China will go in for low-carbon development. Fundamentally, China has to upgrade its production capacity to alter its ways of growth via transforming a few high energy or fuel consumption industries and to eliminate some outdated energy production methods.