Policymaker says next five years will be crucial economic transformation period
China’s consumption will be a decisive factor in achieving the country’s next five-year economic growth targets, as its contribution to GDP will continue to increase, a senior policymaker said on Monday.
The driving power of investment, which was a major factor in preventing an economic hard landing in the wake of the 2008 global financial tsunami, will be relatively weakened, said Yang Weimin, deputy director of the Office of the Central Leading Group on Financial and Economic Affairs.
Net exports, meanwhile, “will be no worse than the current situation, but too fast growth is unlikely in the coming years”, Yang said on the sidelines of a news conference that introduced proposals related to socioeconomic development during the 13th Five-Year Plan (2016-20).
It stressed that the next five years will be a key period of transformation for the country’s economic growth model, marking the end of the high-speed growth driven by exports seen in the past 30 years, according to experts.
Completion of the entire transformation process may require more time, they said.
Zhang Xiaoqiang, vice-chairman of the China Center for International Economic Exchanges, said that process will last for at least three to five years, or even longer, during which period economic growth may face persistent slowdown pressure as the new driving force cannot be formed very soon.
“Difficulties will exist during the transformation, while the GDP growth rate should be no less than 6.5 percent on average in the next five years to achieve the goal of moderate prosperity,” he said.
To avoid a sudden economic cooling, investment should continue to play an important role, but inefficient and repetitive construction should be banned, said Yang.
“Fiscal reform under the next five-year plan is to reallocate rights and responsibilities among the central and local governments. The future model will encourage local government investment and lower local debt risks in order to ensure local governments’ stable fiscal income,” he added.
The National Bureau of Statistics indicated that consumption accounted for 60 percent of economic growth in the first half of this year, up from 51.6 percent in 2014 and 48.2 percent in 2013.
The contribution from gross capital formation declined to 35.7 percent in the first six months of 2015, down from 46.7 percent in 2014 and 54.2 percent in 2013.