China can tolerate lower economic growth rate
On September 13, Li Xunlei, chief economist of Haitong International Securities Group Limited., was invited to participate in “Hongru Forum” to discuss China’s economic situation and outlook.
Viewing from the economic data of August, Li pointed out that though the data got better, this round of economic rebound was backed by investments in infrastructure and manufacturing industry, which lacks recovery continuity. Li stated China’s economy had said goodbye to a double-digit growth. Though this year’s expected economic growth will still be over 7.5%, the overall growth tends to decline. However, Li emphasized that such long-term growth decline may shows China was stepping into the mature economy.
In Li’s opinion, one problem that exists in China’s economy is the excessively high structural debt ratio, and this is related to export orientation and the economic growth pattern of excess production capacity. For the problem of de-leveraging, he took the U.S., Europe and Japan as examples, and believed that China should learn from the U.S. and should promote de-leveraging gradually from finance first and then real economy.
At present, though China’s economic growth rate is declining, the overall employment is still stable. Then, Li Xunlei pointed out that there isn’t a close relationship between employment and economic growth. Therefore the employment cannot be viewed by the traditional thinking which believes that the employment problem can only be solved with maintaining rather high economic growth rate. China can tolerate lower economic growth so as to promote the smooth economic transition.
As the Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee will be held in November, which can be regarded as a springboard for major national reform, Li was not optimistic about benefits from reforms. He explained, “Dividend equals to that benefits subtracts costs. Currently, reforms that have been carried out are easy to promote, with low costs, or can be achieved great benefits, and the remaining reforms are all like hard bones difficult to bite. Therefore, the so-called reform dividend cannot be overvalued. However, it’s time to promote the left reforms. If not, the related costs could high enough that we cannot afford.”
He further put forward that for the smooth progress of the reforms, the key is to increase “the contacts” and lower “the boiling point” —— the former refers to that reforms should be promoted from various aspects to realize the final achievement of targets, and the latter refers to that social transparency should be improved, causing the public to force the reforms to be carried out.
“Hongru Forum” is a public seminar jointly launched by Liu Hongru Financial Education Foundation and SIFL Institute, and is held regularly once in two weeks. The seminar pays attention to various issues in China’s finance and macro-economy, and devotes itself to building a platform for cross boundary exchanges among excellent scholars, government and market institutions.
