Sunday, Apr 30, 2017, 3:00 PM CST – China

Editorial

China must look beyond the growth rate to address its economic problems

Although domestic officials have stressed that the Chinese economy will not experience a ‘hard landing,’ most agree that the country will face a long period of economic slowdown

Based on data recently released by the authorities, it has become clear that China’s economic slowdown has not come to an end. Total trade volume in the first half of 2015 fell by 7.3 percent, and the Producer Price Index has remained in negative growth for 40 consecutive months. Combined with a Consumer Price Index languishing at below 2 percent growth for a long period of time, it is safe to say that the Chinese economy has entered a period of deflation.

Moreover, overall stagnation in the world economy also presents a challenge for China, still seeking to maintain the official central government target of 7 percent growth set at the beginning of the year.

Although domestic officials have stressed that the Chinese economy will not experience a “hard landing,” most agree that the country will face a long period of economic slowdown, which has been described as an economic “new normal.”

To a large extent, what concerns China’s leaders most is not the economic slowdown itself, but various social problems that may intensify and become a threat to political stability if the economic situation deteriorates further. These problems include environmental deterioration, excessive industrial capacity, an overheated real estate industry, huge debts incurred by local governments which may threaten the financial system, and various social problems, including the income gap.

In the past, many government officials appeared to believe that as long as China could maintain a rapid growth rate, it could limit the impact of these problems without actually addressing them. Such a mentality partly explains the seemingly sacred position held by the GDP growth rate in the government’s decision-making process.

But now, as economic slowdown has become inevitable, the government must let go of a mentality centered on an economic policy set according to the growth rate. Instead, it should look beyond this to focus on addressing other fundamental problems.

Growth may slow further. For example, cutting excessive industrial capacity will inevitably bankrupt many companies in relevant industries, increasing overall efficiency but also negatively impacting economic growth.

With its long-term goal being economic restructuring, the government should have the courage to weather some short-term economic difficulties. As several major factors that have undermined China’s economic development in the past decades, such as a high savings-income ratio and a continuing process of massive urbanization, have remained unchanged, the Chinese government should have the confidence to restore market mechanisms to its currently distorted economy. In the long run, this would mean that China can eventually resume rapid economic growth.

Tags:

Editor's Picks

Sex for Snacks

In cities like Shanghai and Chongqing, a handful of high school…[More]

Worked to Death

A growing number of young Chinese white-collar employees are dying of…[More]

TROTSKY IN CHINA

How Communism’s most controversial theorist finally found an audience – in…[More]

What do Chinese People Want?

“I wish I could do what you do.”…[More]

THE HERMIT HUNTER

A student of Buddhism with a keen interest in China’s…[More]

Prize Fighter

Elevated into the State-approved pantheon of great Chinese writers thanks to…[More]

Dams in Distress

In 1975, over 60 dams collapsed after a rainstorm in Zhumadian city, Henan…[More]

Pathologically Politicized

Practitioners at all levels concur that “messy” is the word that…[More]

HIVE MINDED

China’s indigenous honey bee is under threat from both environmental…[More]

The New Class

China’s growing online education market has attracted the attention of…[More]

Exam Boot Camp

A middle school in Anhui province has earned a reputation for…[More]

From Stall to Mall

Taobao’s shift towards a business-to-consumer model has come at a…[More]

In Whose Court?

The failure of the country’s administrative litigation system has prompted…[More]

Tradition on Trial

After Confucianism made the maintenance of inequality between the sexes fundamental…[More]

Inevitable Brutality

The vicious murder of a doctor in a Zhejiang hospital shows…[More]

Progress or Pornography?

A new sex education primer aimed at elementary school-age children has…[More]

Graft Breeds Graft

The gap between the investigation and prosecution of official corruption cases…[More]

Problem Solved?

Former Politburo member Bo Xilai’s public trial sends mixed messages…[More]

Saving Nature

The concept of animal welfare is yet to be widely acknowledged…[More]

An Avoidable Tragedy

Poor city planning and lax safety regulations turned a minor gas…[More]

Who Cares?

A new law decrees that all Chinese citizens are now obliged…[More]

ANGRY

A policeman pulled his gun to dissuade villagers from stealing oranges…[More]

BEWILDERING

A 74-year-old man surnamed Xie from Shenyang, Liaoning Province was duped out of 420,000 yuan (US$69,342), despite bank employees’ efforts to…[More]

Mean Streets

The chengguan system has become the most visible symptom of a…[More]

How do Chinese people live?

So, the bottom line is that Beijing is an expensive place.…[More]

Back in Action

After stagnating for 10 years, China’s SOE reform has fired up…[More]

THE HANGING DEAD

The hanging coffins of the Bo people, a Chinese ethnic minority…[More]

AMUSING

Wang Xun, an archeologist with Peking University, arranged the bones of…[More]

Trust Trip

Embarking on a three-month car journey around China without handing over…[More]

Fading Lights

For those who grew up under the bright lights of China…[More]