Nobel economist: major downturn in China unlikely
- By Chen Boyuan
0 Comment(s)
Print
E-mail China.org.cn, March 21, 2016
|
|
|
Edmund Phelps shares his views on China's economy in the future on Friday at Tsinghua University in Beijing. [Photo by Chen Boyuan / China.org.cn] |
The Chinese economy is expected to expand 6.5-7 percent this year, its lowest growth rate expectation in years, but both the Chinese government and leading international economists are confident that a hard landing remains unlikely.
Edmund Phelps, the recipient of the 2006 Nobel Memorial Prize in Economic Sciences, said that it was "reasonable to expect" this medium-high growth rate in China, taking into account China's entrepreneurial actions to seize the opportunities of lower production costs and urbanization.
"There may be financial difficulties that will cause a temporary dip in employment; but China may also get lucky, since there may be positive forces coming from the rest of the world," said Phelps on Friday, addressing the international discussion centered on the "Role of the State in the Next Stage of China's Development," jointly held by Columbia University Center on Global Economic Governance, Columbia Global Centers | Beijing, IPD and Tsinghua University. "What was going on in China before is still going on, pushing productivity," he said.
Given the size of the Chinese economy, the second largest in the world, many Chinese economists are hopeful that China can have a fairly easy rise without the fear of a serious downturn, but Phelps warned that the low probability of a downturn does not rule out less serious risks, as difficulties can still surround investment and innovation in the private sector.
The Nobel economist acknowledged measures taken by Chinese Premier Li Keqiang to simplify approval procedures so that entrepreneurs find it easier to start new companies in the private sector.
Phelps was actually among the foreign experts who participated in the consultation symposium for perfecting this year's government work report, which Premier Li delivered on March 5 at the annual NPC session.
At the symposium, held last January, Phelps said that opening the private sector to a multitude of start-up firms, a decision adopted by the Chinese government starting in 2014, could "create a faster growth in productivity and income.”
Such measures include allowing banks to create financial companies to facilitate small businesses in the private sector to raise capital for innovative projects. Even so, according to Phelps, China's financial sector is "still a long way from being as helpful for innovation as it could be."
He insisted that the private sector should not be regarded as inferior to the public sector, especially in terms of creativity and innovation, because it is generally the more dauntless private sector – both in the financial sector and the real economy – that wishes to see changes happen for increased survival in the market.
Go to Forum >>0 Comment(s)