久久亚洲国产成人影院-久久亚洲国产的中文-久久亚洲国产高清-久久亚洲国产精品-亚洲图片偷拍自拍-亚洲图色视频

US EUROPE AFRICA ASIA 中文
Opinion / John Ross

Investment will boost China's economy

By John Ross (chinadaily.com.cn) Updated: 2012-09-28 10:31

Investment will boost China's economy

The underlying weakness in the US, European and Japanese economies was underestimated in China's forecasts for 2012. The US is currently consuming more capital than it creates, while its percentage of investment in GDP is near post-World War II lows. Japan's investment levels have declined for two decades while its savings rate has fallen. EU investment is the lowest percentage of GDP since World War II and declining. These economies cannot achieve rapid recovery under such conditions.

These structural features dictated the poor short term performance of Western economies during 2012. The EU entered a new recession with GDP still 2.1% below 2008's peak levels. Japan's latest GDP data shows tortoise like 0.8% annualized growth with output still 1.9% below its peak. US GDP growth decelerated from 4.1% at the end of 2011 to 1.7% in the last quarter. The US PMI fell for three months to 49.6 in August. US industrial production in the same month only rose 2.8% compared to a year previously – less than a third of China's growth.

The problems in developed economies directly affected China. China's 10% projected export increase in 2012 will not be achieved, helping explain why China's economy significantly decelerated in the first part of the year. GDP growth fell to 7.8 percent in the first half of the year, while August's industrial growth declined to 8.9 percent and the official manufacturing Purchasing Managers Index fell to 49.2.

Weakness in Western economies can to a certain degree be compensated for by China's export growth to developing countries as the latter now constitute 53% of China's exports. But as Western economies still account for almost half China's current global market the growth prospects for China's exports are structurally limited. Consequently, as the great majority of analysts conclude, China's economic expansion in the next few years must be based primarily on domestic demand. It is therefore good news for China's economy later this year that lessons drawn by China's economic policy makers have begun to overcome some confusions which existed earlier regarding the dynamics of China's domestic demand. This process has been aided by policy recommendations by Lin Yifu - China's former World Bank Senior Vice President and Chief Economist.

Problems had earlier been created in discussion of China's economic policy by confusing 'domestic demand' with 'domestic consumption'. The two are not the same. Domestic demand consists not only of domestic consumption but also domestic investment. Formulas such as the following, which were regularly used, were therefore erroneous: 'China will not be able to rely on exports for its economic growth. Therefore, China will have to adopt a consumption-driven growth strategy.'

From the viewpoint of increasing domestic demand, China's exports can just as much be replaced by raising China's domestic investment as by increasing consumption. Indeed whether, and in what proportion, to expand China's domestic demand by expanding investment or consumption is a crucial economic policy choice.

The clarity necessary on this has been highlighted by Lin Yifu and confirmed by trends in China's economy in the first part of 2012. Lin argued that, compared with boosting consumption, encouraging investment is a more sustainable and successful path. This analysis, which is justified by factors set out in Lin's writings on long term economic growth, was also clearly confirmed by trends in China's economy during 2012.

Some deceleration in China's economy was inevitable in 2012 due to negative international trends. Nevertheless this was magnified earlier in the year by errors in China's normally surefooted economic policy which are now being overcome.

China's economic policy during the last period took as a key aim raising consumption – i.e. living standards. This indeed should be economic policy's aim – the target should be maximizing the sustainable rate of increase of consumption. But unfortunately this became confused with a different idea of sharply increasing the percentage of consumption in China's GDP. These two goals are actually contradictory as GDP growth, which is largely fueled by investment, underpins sustainable consumption. Sharply increasing consumption's percentage in GDP cuts investment levels, thereby inadvertently leading to lower GDP and consequently lower consumption growth.

The practical consequences of this confusion were clear in 2012. To attempt to raise the share of consumption in China's GDP, wage increases far above the economy's growth rate were pushed through. In the most striking examples, Sichuan raised the 2012 minimum wage by 23 percent, and Shenzhen announced a 16 percent increase to the 2012 minimum wage following a 20 percent increase in 2011.

Such measures increased inflationary pressures in China's economy and squeezed private and state company profits, helping create in the first half of 2012 a trend accurately termed 'profitless growth'. Falling profits in turn led to investment reductions, with fixed asset growth declining from 25.0% in August 2011 to 20.2% in August 2012. Falling economic growth also reduced government tax receipts, pressuring the state budget.

This process illustrates why the phrase 'consumer-led growth', sometimes used in China, is fatally confused. In a market economy production does not take place because there is a demand for consumption. It only occurs if production is profitable. As profits declined in 2012 investment fell, the economy slowed, and consumption's growth rate therefore declined. The growth rate of retail sales, before adjusting for inflation, fell by 4.9 percent between December 2011 and August 2012 while the CPI fell by 2.2 percent. Real retail sales growth, the main factor in consumption, therefore fell. Predictably, attempting to sharply increase consumption's percentage in GDP led to the population's consumption rising more slowly!

But while consumption was boosted the government initially did not use available policy tools to halt the decline in fixed investment – as shown by the fall in fixed asset formation. These policies are now being corrected. Instead of the confused formula of 'consumer-led growth,' Premier Wen Jiabao has rightly emphasized 'a pattern in which economic growth is jointly driven by consumption, investment and exports.' A $154 billion state-stimulated investment program has been announced. These practical steps by the government are clearly broadly in line with the economic policy arguments advanced by Lin Yifu.

If China's government continues these corrections, China's growth will stabilize and then accelerate towards the end of 2012.

Most Viewed Today's Top News
...
主站蜘蛛池模板: 性欧美videos精品 | 国产免费亚洲 | 在线久草 | 无限观看社区在线视频 | 欧美成人高清性色生活 | 一区二区三区网站在线免费线观看 | 欧美日韩亚洲高清不卡一区二区三区 | a级毛片毛片免费观看永久 a级毛片毛片免费很很综合 | 欧美日韩在线视频 | 看亚洲a级一级毛片 | 国产一区曰韩二区欧美三区 | 91精品成人福利在线播放 | 中文字幕一区二区在线视频 | 久久99亚洲精品久久久久99 | 久久精品女人毛片国产 | 日本亚州在线播放精品 | 一级a做爰片欧欧美毛片4 | 国产日韩久久久久69影院 | 午夜久久视频 | 性亚洲精品 | 欧美曰批人成在线观看 | 一区二区三区不卡在线 | 婷婷丁香花麻豆 | 国内一级特黄女人精品片 | 在线观看免费视频网站色 | 一区国严二区亚洲三区 | 亚洲一区二区三区福利在线 | 欧美精品区 | 国产一区精品在线观看 | 91精品国产色综合久久 | 午夜性福 | 日本免费一二区视频 | 国产一级免费片 | 日韩久久一区二区三区 | 国产精品久久一区 | 日韩亚洲欧美一区噜噜噜 | 欧美片a| 国产区高清 | 亚洲日本高清 | 男人扒开双腿女人爽视频免费 | 亚洲男人的天堂久久精品 |