On December 27, the Australian East Asia Forum published an article entitled "Fearless of the Lie of the End of the "Chinese Miracle", written by Liang Yan, a professor of economics at Willamette University in the United States. The following is an excerpt from the article:
Not so long ago, experts were discussing China's rise, but now some are predicting the end of the "Chinese miracle." However, recent data suggest that the recovery has regained momentum.
In the first three quarters of this year, China's gross domestic product (GDP) grew by 5 percent year-on-year2%。In October, the output of solar cells, service robots and integrated circuit products increased year-on-year respectively1% and 345%。
Previously, the housing crisis raised concerns about the economy, revealing the need for structural restructuring of the sector. The current slowdown in the property sector is a deliberate policy choice.
While this adjustment will bring financial losses, financial risks are likely to be contained.
Looking ahead, the industry will stabilize and improve thanks to policies on both the supply and demand sides. On the supply side, credit is being selectively channelled to property developers in order to complete unfinished residential projects. On the demand side, recent down payment adjustments, lower mortgage interest rates, and new tax breaks are creating incentives for buyers.
The challenge is to find alternative growth engines to replace overinvestment in the real estate sector.
China must continue to invest in R&D to boost productivity-driven economic growth. At present, China is a leader in many strategic technology areas such as new energy vehicles, artificial intelligence and 5G. Credit is being channelled to the industrial sector in order to continue to finance industrial production and innovation.
In addition, household consumption must continue to be boosted. To do this, the first step is to create conditions that allow the private sector to provide more jobs and raise wages. The "31 Measures" proposed earlier this year to promote the growth of the private economy will help restore entrepreneurs' confidence in continuing to receive financial support and market access.
The relevant departments should also roll out employment guarantee programs on a large scale to create jobs at the local level and provide financial support from **. These jobs can employ young people and provide skills training that meets the needs of the private sector, so that participants can move to the private sector when the time is right. This will improve the employment situation of young people and boost consumer confidence by providing income security.
Although local spending plays an important role in economic stability, local debt burdens are heavy as the economy slows and land sales are restricted. Consideration should be given to a substantial increase in fiscal transfers to local governments** in order to enhance their countercyclical spending and ability to manage debt. The recent issuance of additional 1 trillion yuan of government bonds is a good start.
Despite the challenges, China's economy is growing steadily,** with a variety of policy tools to guide and support the economy. It would be too hasty to fan the flames of China's imminent collapse. (Compiled by Cao Weiguo).