The current Chinese economy does not call for a strong stimulus but rather a reform of macroeconomic policy, said experts at a high-level forum on China’s economy organized by the Chinese Academy of Social Sciences (CASS) in Beijing on Feb. 13 and 14.
CASS President Xie Fuzhan pointed out that the world is facing a period of major changes never seen in a century, and the world economy and politics are undergoing complex and profound changes. As socialism with Chinese characteristics has entered a new era, the principal contradiction facing Chinese society has evolved. However, the basic dimension of the Chinese context—that our country is still and will long remain in the primary stage of socialism—has not changed. China’s international status as the world’s largest developing country has also not changed. China is still and will long remain in an important period of strategic opportunity for development.
Xie said that economic research should be carried out on the basis of the above assessment.
The main reason for a future slowdown of China’s economic growth would be the disappearing demographic dividend marked by the decline in the total working-age population and in the total economically active population, said CASS Vice President Cai Fang.
However, the economic growth rate is not lower than the potential growth capacity, so there is no need to fully implement a strong stimulus policy, Cai said. Cai proposed that the macroeconomic policy should be expanded. He suggested eliminating more obstacles to the effective supply of factors of production and increasing the potential growth rate through economic system reform, as well as ensuring the people’s livelihood and expanding consumer demand through social policies. Reduction of tax and fees should be a supply-side structural reform measure rather than a stimulus. The 3.0 version of the active employment policy should be an inner part of macroeconomic policy.
CASS Vice President Gao Peiyong pointed out that as the main contradiction in China’s economic growth shifts from the economic aggregate to structural problems, and as the main aspect of the contradiction shifts from the demand side to the supply side, active fiscal policy should shift from expanding demand to adjusting structure, transitioning from a stimulating policy approach to a reformative action approach. The focus is now on quality and efficiency, without engaging in strong stimulus “flooding.”
Li Yang, chairman of the National Institute for Finance and Development, said that in the face of enormous challenges, improving macroeconomic regulation and control is more important than ever. Fiscal policy and monetary policy constitute the two major policy systems for macroeconomic regulation and control. As such, coordination and cooperation between the two is crucial.
Li Ping, director of the Institute of Quantitative and Technical Economics at CASS, analyzed and predicted China’s economic situation in 2019. China’s GDP growth rate is estimated to be 6.3 percent in 2019, a slight decrease of 0.3 percentage points on the previous year. The overall price remains stable, with a projected CPI growth rate of 2.0 percent, a slight decrease of 0.1 percentage points on the previous year. The growth rate of PPI is estimated to be 1.3 percent, a sharp drop from the previous year. The total retail sales of consumer goods will reach 43.3 trillion yuan, with a nominal growth rate of 8.4 percent and an actual growth rate of 6.0 percent, slightly lower than the previous year by 0.7 and 1.1 percentage points respectively.
Huang Qunhui, director of the Institute of Industrial Economics at CASS, said that the focus of China’s strategy to become a manufacturing power needs to shift from the “Made in China 2025” plan to high-quality development in manufacturing.
CASS Member Lyu Zheng said that China has completed the stage of catching up in quantity in traditional manufacturing, and its gap with developed countries is mainly seen in the technologyintensive industries. The shortcomings of technology-intensive industries are mainly in the top ten industrial fields highlighted in “Made in China 2025,” including the new-generation information and communication technology industry.
Since these ten industries involve complex technologies, there is a need for technical accumulation and supporting systems. It is only six years until 2025, in which time it will be very difficult to achieve the plan’s goals, Lyu said. As such, Lyu recommended extending the plan to “Made in China 2035” through further revision and improvement.
