After experiencing rapid economic growth in the past two decades, China's economy is facing obstacles such as over-investment, widening income gap and an absence of a proper legal system to protect property rights, leading Chinese economists said in Shanghai over the weekend.
More than 500 economists and professors from China's leading universities attended the two-day Third China Economic Forum held at Fudan University, analyzing the current situation and development trend of China's economy.
An urgent problem the Chinese government has to tackle is the widening gap between high-income groups and laid-off urban residents and jobless farmers, said Fan Gang, director of the National Economic Research Institute.
However, he strongly opposed the government's intention to subsidize people who live under the poverty line to narrow the gap.
"It is impossible for China to let its urban residents subsidize all farmers, who account for some 45 percent of the country's total population as China is different from developed countries which have a rural population of less than 10 percent," said Fan from the non-government non-profit organization.
About 400 million Chinese farmers migrate to the urban areas to find jobs every year, he said.
The long-term solution to this issue, he said, is to keep the economy healthy to create more job opportunities for unemployed farmers, while setting up an accompanying social security system.
"As long as everyone's living standard continues to improve, this problem will be solved and we can sustain economic development with social stability," he said.
To Zhang Jun, director of the Chinese Economic Research Center of Fudan University, the lack of a legal system to protect property rights can undermine the country's future growth.
"The Chinese government's policy toward property rights has changed a lot. However, the laws haven't been revised to incorporate new formats of ownership so far," he said. "Without clear-cut laws, companies and individuals will hesitate to invest more to develop their businesses."
The central government has been revising its policies to encourage private and foreign investment in the country and has vowed to protect all legal incomes. But these changes haven't been reflected in laws so far, Zhang said.
Another hot topic discussed at the forum is whether China is suffering from over-investment as fixed asset investments in the first three quarters hit 3.44 trillion yuan (US$414.5 billion), 30.5 percent higher than the same period last year.
Wu Jinglian, a leading economist at the State Development and Research Center under the State Council, warned during an earlier lecture in Shanghai that over-investment was already a problem.
"A large increase in investments without a corresponding rise in purchasing power will result in a demand-and-supply imbalance, which may possibly lead to a crisis in the country's economic development," the Oriental Morning Post reported Wu as saying.
However, since China's per capita GDP still accounted for only some 4 percent of Japan's and 3 percent of the United States', the country has great development potential, said Lu Deming, the director of the Economics College at Fudan.
(Shanghai Daily December 22, 2003)