Recent months have witnessed a series of tumultuous developments at home and abroad. These include the escalation of the European sovereign debt crisis, concerns over the Chinese Government's regulation of the real estate market and plummeting stock prices in China.

Will China's "economic bubbles" soon burst, as some foreign media have predicted? Will its economic growth rate decline sharply over the next decade? People's Daily Overseas Edition spoke to Li Daokui, head of the Department of Finance of Tsinghua University's School of Economics and Management, about these questions. Li is also a member of the Monetary Policy Committee of the People's Bank of China, the country's central bank. Excerpts of the interview follow:

Maintaining momentum

People's Daily Overseas Edition: Given the government's measures to cool down the real estate market and falling stock prices, some analysts have argued that prospects for economic growth this year have deteriorated noticeably. What is your take?

Li Daokui: This view is totally groundless. China will maintain a good momentum of economic growth this year. Moreover, it will move into a new period of rapid growth in the next decade with an annual GDP growth rate of 9-10 percent, as long as it continues to adjust its economic structure and change the mode of development.

As the background to China's economic growth remains unchanged, our policy should not vacillate frequently under the effect of short-term factors. We should stick to the strategy of adjusting the economic structure and hastening the change of the mode of economic development. We should be forward-looking and determined so we can lay a solid groundwork for the long-term growth of the Chinese economy in the next 10 to 20 years.

Considering the yuan tends to appreciate slowly against the dollar, China is likely to surpass the United States to become the world's biggest economy by 2020. Its per-capita GDP will reach some $17,000, higher than many other moderately developed countries. This will not be possible unless China makes unremitting efforts to adjust its economic structure and mode of development.

No double-dip recession

Will the European sovereign debt crisis cause a double-dip recession? How will it affect China's economic development?

The financial crisis, which broke out in the United States before spreading to Europe, has led to a long-term slowdown of U.S. and European economies. After taking its toll, the financial storm is now largely over.

The Greek debt crisis has not reversed the trend toward world economic recovery. Major recovering economies--the United States, Germany, France and Japan--have not been directly impacted by the European debt crisis.

I don't think the crisis in Europe will evolve into a second round of financial crisis in the near future. The crisis will not result in a double-dip recession of the world economy in the short term either.

Despite the impact of the European debt crisis, the Chinese economy will maintain the momentum of steady recovery and sound growth. A prime reason is that China has greatly lessened its dependence on foreign demand since its 2009 economic restructuring.

Consumption bottleneck

Some analysts say that China's rising labor costs and severe ageing problems may cause the country's economic growth rate to drop. What are your comments?

To date, consumption, rather than declining production capacity, has been the bottleneck for China's economic growth. The ratio of wages to the GDP will increase along with improvements in China's demographic structure and the decline in the number of migrant workers from rural areas. As a result, the so-called "demographic dividend" will come to an end. This is a sign of China's upgrading consumption structure, deepening urbanization and growing domestic demand.

In the next decade, China will experience a new round of development characterized by continued increase of domestic demand, further lessened dependence on foreign markets and improving economic structure and development mode. Urbanization, growing consumption and a "green revolution" will fuel rapid economic growth in the next decade.

First, China's urbanization process is bound to accelerate. The country's urbanization rate, which stands at 46.6 percent at present, is relatively low compared with other countries at similar development levels. A 1-percentage-point increase of China's urbanization rate can translate into at least a 2-to-3-percentage-point rise of its GDP growth rate.

Second, China's consumption structure will continue to upgrade, unleashing new potential for consumption growth. China has witnessed the most rapid consumption growth in a decade in the past two years. Measured by retail sales, its consumption has soared more than 15 percent. Moreover, the ratio of wages to the GDP has already begun to rise. In the near future, the growth rate of wages will exceed that of the GDP, leading to sustained consumption growth.

At the same time, the government will promote "green revolution" by phasing out highly polluting, energy consuming and low efficiency production capacity. If 5 percent of the outdated production capacity is turned into new production capacity every year, it will contribute to at least 2 percentage points in annual GDP growth. This will not only help strengthen foundations for economic growth, but will also lead to an increase in investment.

Real estate regulation

Will the government's efforts to cool down the real estate market weaken China's growth momentum?

No. The government intervened in the real estate market at a time when its economic stimulus policies were taking effect. The Central Government adopted effective measures to cope with the financial crisis in 2009. The measures, however, had side effects as well. By applying macroeconomic tools in the real estate sector, the government intended to address the fallout of the 2009 policies aimed at stimulating bank loans and investment.

This government's regulation of the real estate sector will help lay a stronger groundwork for China's economic growth. The policy of reining in soaring housing prices will continue. Its focus, however, will shift to providing government-sponsored affordable homes.

A new development pattern should be established in the real estate sector to replace its current development mode. In this process, the government will try to make homes affordable to young people by developing affordable housing projects as part of its efforts to alleviate social tensions.