China’s Macroeconomic Situation in 2013 with Predictions and Policy Recommendations for the Next Five Years*

Li Yang 1, Zhang Ping  2, Zhang Xiaojing 3 and Wang Hongju 4
1 Chinese Academy of Social Sciences (CASS), Beijing, China
2, 3, 4 Institute of Economics of CASS, Beijing, China
Abstract: China’s economy is currently on a modest recovery path, but its foundation still remains fragile. According to our projections, the rate of GDP growth in 2013 might be over 8% and higher than the rate of last year. In the next 5-10 years, the accelerating growth trends seem to reach an end, and China’s growth tends to step into a new phase characterized by a structural growth deceleration. We predict that the potential growth rate might fall into a range of 7%-8% per year. Moreover, according to the estimates on the non-agricultural employment elasticity and labor force supply, in 2013-2017, a 7% annual growth is sufficient to achieve the full employment of urban and rural people. It implies that instead of the rapid growth rate, China’s macroeconomic objectives for the next 5-10 years should focus more on the development quality, which refers to the improvement in microeconomic efficiency, increasing competiveness and stimulating technological innovations. Accordingly, the policy concerns should shift from demand-side management to supply-side management.
Keywords: structural growth deceleration, supply management, stable growth of higher efficiency

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