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(DOC) Challenges

By Marcus Wagner,2014-07-22 02:50
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Challenges

    Challenges

ChallengesAheadofChina’sEconomy

    ;LuZhongyuan,VisePresidentolDevelopmentResearchCenteroftheStateC

    ounci

    ;economicrestructunng,energysaving ;andemissionreduction.Forthefirst ;threequarters,growthcontinuestobeat ;9%.Theannu~growthexpectstoover- ;pass9%.fasterthanothereconomies. ;1hiswillstronglysupporttherecovery ;ofworldeconomyanditseffortstoavoid ;adoubledip.

    ;China’seconomicpotentialis

    ;proppedupbyasetofpositwefactors? ;Onthedemandside.industrializa

    ;tionandurbanizationareaccelerating, ;householdspendingareexpandingwith ;focusonhousingandautovehicles,and ;regionalgrowthpointsareburgeoning. ;Robustinvestmentandconsumption

    ;makethemarketincreasinglyresilient ;andmaneuverable.Onthesupplyside, ;liquidityhasturnedfromshortageto ;relevantlyabundantandtheadvantage ;ofoveral1huamountsupplyoflabor ;forceswillremainpositive,andcanbe ;translatedintocomparativeadvantages ;ininternationa1trade.

    ;However,China’seconomyis

    ;exposedtomultiplechallenges,some ;S

    ;ofwhicharequite

    ;tough.Itisundeni

    ;ablethattheclimb

    ;ingcostsof1abor,

    ;1andandother

    ;resources,coupled

    ;withagingpopula

    ;tionencroaching

    ;uponChina’sdemo—

    ;graphicdividend,

    ;willundermineits

;traditionalcompeti

    ;tivestrengthoflow

    ;costs.

    ;Chinaisstill

    ;intheprocessof

    ;industria1ization

    ;andurbanjzatjon.

    ;Itsgrowthpatternisratherextensive, ;wherethespeedofgrowthisimportant ;forachievingthebenefits.Moreover, ;Chinaisconstantlychallengedtocreate ;morejobs.1heworking-agepopulation ;wil1notstopgrowingunti12015.The ;laborforcewil1bulgeby8millionto9 ;millionpeopleeachyearinaforesee

    ;ablefuture,makingitnecessarytokeep ;theeconomyonarelativelyhighgear. ;However.itisincreasinglydicultfor

    ;Chinatocontinuegrowingby9%and ;above.

    ;Growthofeconomieswilldiverge. ;RecoveryoftheUSandEUturnsout

    ;tobeabumpyride.Qpoliciesofthe ;USremainamajoruncertaintytothe ;worldeconomy.Chinasuffersahostof ;externaluncertainties.

    ;Inflationarypressureisbuilding ;up.EventhoughChinawellcontrol ;the1iquidityathome,themid-tol0ng

    ;termpressureofinflationcausedby ;feedininflationandcosthikecannot ;beneglected.Toharnesstheoverheated ;housingmarketandrealestatebubbles, ;thelong-termmechanismshallbeopti

    ;mized.

    ;Short-supplyofoilandpowerat ;homehighlightstheneedforreform.In ;ByLuZhongyuan

    ;April,notthetraditionalhighseason ;ofdemand,Chinasufferednationwide ;shortageofoilandelectricity,theafer- ;shockofwhichisstilllingeringinthe ;southernprovinces.Thisisamirrorof ;structuralproblemsandtheextensive

;growthpattern.Moreimportantly,re

    ;formisdesperatelyneededonresources ;pricingandenergysupplysystem.De

    ;spitesomeadjustmentsofpowerprices, ;pricingmechanismofresourcesstill ;needreform.

    ;Thesmallandmicroenterprises ;areailing.Upsurgeincostsanddifficul- ;tiesinsecuringfinancemaketheirlife ;everharder.

    ;eopportunityforrestructuring ;ispreciousandelapsing.Slowingdown ;oftheeconomicgrowthusuallyrepre

    ;sentsagreatportunltyforrestructur- ;ing.Chinaisalsofacinganewround ;oftechnicalandindustrialrevolution, ;increasingItSpressureforrestructuring. ;Financialrisksoflocalgovern

    ;mentsareemerging.Thepublicis ;increasinglyconcernedoverLocal ;GovernmentFinancingPlatforms ;(LGFP)andtheirbalancesheet.The

    ;centralgovernmentissortingoutand ;regulatingtheLGFPs.China’soverall

    ;publicfinanceishealthyandiscapable ;torespondtotheseissues.Thekeyisto ;setupamechanismtoensureapositive ;fiscalcyclebetweenthecentralandlocal ;levels.

    ;Qualityofcompanieslistedabroad ;needtobeimproved.Theforeignex- ;changeregimealsodeservesoptimiza- ;tion,yetinaproactive,gradualand ;controlledmanner.

    ;Chinaismakingeffortstotackle ;thedomesticchallenges.Tosolvethe ;problemsandpreventrisks.itwilltake ;greatereffortsandcreatemoreenabling ;1nstitutionalarrangements,evengetready ;forapossiblelearningexperienceofim

    ;provingaftertryingintheriskofmaking ;errorsandcorrectingtheerrors.@ ;

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