Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
Real-time insight on key fixed income and fx markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
BEIJING (MNI) - With China's economic growth in the long term expected to
slow, future growth will rely on the implementation of reforms and the
transformation of its labor force, Cai Fang, vice president of the Chinese
Academy of Social Sciences, said Thursday at an economic forum that gathered top
Chinese economists and financial regulators.
"Some people hope our economic growth rate could have a 'V' shape rebound,
and return to the previous growth pace," of 8% or 9%," Cai said. "I think that's
Cai said China is currently in a "Lewis turning point," which refers to the
period when the labor force transfer from the countryside to cities has bottomed
out and an overall labor force shortage comes into being, leading to an upturn
in urban wages.
The benefits brought by the scale of the workforce population in previous
decades are rapidly disappearing, Cai said, which can be seen in higher labor
costs, the reduction in capital return rates and productivity slowdowns. "This
does not mean that we are doing worse than before, but we enter the next new
development phase," Cai said. "They add difficulties [to China's economic
growth], and a slowdown is inevitable."
"The labor force shortage is the main factor behind the slowdown of
economic growth," as are higher labor costs, Cai said.
China's economic growth pattern will be a downward curve with several "L"
shapes, although that depends on whether the government efficiently manages the
overall economy, Cai said, adding that macroeconomic policies need to be more
prudent and effective for this to occur.
"The more concerned you are with the slowdown of the growth pace, and to
use inappropriate policies such as strong stimulation, will instead produce bad
results," Cai said. "Thus, the only way is to reform."
In a separate discussion at the same forum held by NetEase Finance, a
financial news provider, Liu Shijin, former deputy head of the State Council's
Development Research Center, said China's economic growth would be an "L" shape,
with small "W" shapes occurring within the overall "L."
China will not return to the double-digit, high-paced growth it experienced
in the past, Liu said, adding that growth will not rise too quickly or drop too
rapidly. "China is now on a new platform where the growth is medium-paced and
stable, but not in a 'new cycle,'" Liu said, rebutting the recent discussion
among Chinese economists on whether a so-called new cycle -- a period where the
economic growth pace is increasing -- has arrived.
Liu said China is currently in a "rebalancing" phase, where economic
growth is expected to be basically stable before dropping to some degree and
returning to a slower growth rate.
"This platform would last for a decade or so, based on international
experiences," Liu noted.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: firstname.lastname@example.org
--MNI Beijing Bureau; +86 (10) 8532-5998; email: email@example.com