context: Facing slowdown pressures, high-quality growth and economic restructuring were overshadowed by the return of fiscal and monetary stimulus. Current strategy still weighs heavily on traditional growth drivers like infrastructure, which only exacerbates structural problems and undercuts efforts to address them.
While the economy is experiencing downward pressure, this has little to do with the trade war; mixing these events together will overlook many important problems, says Liu Shijing 刘世锦 Chinese People’s Political Consultative Conference economic commission deputy director. Liu advocates for a paradigm shift, involving
- lowering expectations on economic growth rate
- emphasising high-quality growth requires high employment, controlled financial risks, profitable enterprises, sustainable environment and stable income; the latter four are very unstable as a result of high-speed, unsustainable growth
- the hundred-year development goal can be completed with 6.3 percent annual growth over the next three years; it is advisable to maintain a moderate speed at 4-5 percent annual growth, which, according to international experience, can persist for ten years
- stabilising growth should not rely on infrastructure; other growth drivers should be cultivated
- real estate and infrastructure net fixed-asset creation through investment already passed their peak and governments’ land financing strategy has reached its end; the model is unsustainable as the former adds on household debt and the latter exacerbates local government debt
- smoothing urban-rural production factor movement, especially land reform, is a key aspect to unleash consumption potentials
- active fiscal policy should address weak spots in medical care, aged care, education, social security and basic research; even infrastructure investment should revolve around these areas
- cultivating domestic service markets in aged care, culture and recreation prior to building a highly-quality, open-market economy
- goods consumption plateaued as the economy reached a certain point; service is key in consumption upgrade
- reforming monopolistic sectors in oil and natural gas, electricity, telecommunication, railway and finance