China's Economy in 2015 and Beyond: Leading Chinese Economists Remain Optimistic
With temperatures dropping below the freezing point, leading Chinese economists brought a breath of warmth to the international business world with their optimism and positive prediction about China’s economic outlook for 2015 and beyond, at the Annual China Economy Forecast Forum hosted by the National Committee on United States-China Relations at the New York Stock Exchange on Wednesday, January 7, 2015. Challenging the skepticism about China’s continuing economic growth, a panel of economists, consisting of the former Chief Economist of World Bank, the current Director of the China Macroeconomic Research Center, economic professors, and chief economists of leading Chinese investment banks, consistently predicted that China’s gross domestic product (GDP) will continue to grow at a rate not less than seven percent (7%) in 2015 and many years to follow.
A professor and honorary dean of the National School of Development at Peking University, vice chairman of the All-China Federation of Industry and Commerce and chief economist at the World Bank from 2008 to 2012, Dr. Justin Yifu Lin believes that China, serving as the critical engine of growth in the world, can maintain a robust GDP growth rate between seven percent (7%) and eight percent (8%) for another decade or more. Dr. Lin believes that China will sustain this positive rate of growth through implementing policy reforms, investing in technology and green energy research and development, and shifting from a manufacturing economy to a service and consumption driven economy. Dr. Lin notes that China is in the process of eliminating remaining market distortions through various policy reforms and the Chinese government will allow the market to play a more decisive role in resource allocation in China. With rigorous policy reforms underway, Chinese government strives to foster a more level playing field for business by eliminating super-national and sub-national treatments and by shifting from relation-based to merit-based business dealings.
Despite pessimism from some experts that China is approaching an economic downturn or significant slowdown, Dr. Lin, along with other economists presenting at the Forecast Forum, described any deceleration in growth rate in China’s economy as a natural course for a developing country that is experiencing a transitional economy. Dr. Lin explained that any such deceleration is likely due to external and cyclical problems instead of internal structural problems in China. Compared to other emerging economies, such as Brazil’s and India’s, that are experiencing similar economic development phases, China is experiencing a decelerating growth rate in a much less drastic manner.
Echoing Dr. Lin’s optimism, Dr. Lu Feng, a professor at the National School and Development and Director of the China Macroeconomic Research Center at Peking University, attributed the sluggish economic growth rate in China’s economy in recent years to the market imbalance China accumulated as a developing country in the previous decade. Dr. Feng rebutted former U.S. Treasury Secretary Lawrence Summers’ projection for an abrupt decline in China’s growth over the next decade. Summers and fellow Harvard University professor Lant Pritchett published a paper in October 2014 forecasting that China’s economic growth will slow toward a five percent (5%) annual rate. Dr. Feng contends that Summers’ conclusion is flawed because his analysis assumes that China follows the statistical regularities that apply to other countries, ignoring China’s unique characteristics, such as its high savings rate, high investment returns and bourgeoning entrepreneurship. Dr. Feng projected that China’s growth in 2015 is stabilizing at a rate of seven percent (7%), entering the “final phase of adjustment” from an expansion rate of more than ten percent (10%) in the periods before 2008.
The Forecast Forum concluded with another optimistic projection - that Chinese stocks will rise thirty percent (30%) in 2015 following a fifty three percent (53%) surge in 2014, by China International Capital Corporation (CICC), a leading investment bank in China that correctly called last year’s rally. According to the Chief Strategist and Managing Director of CICC, Dr. Huang Hai Zhou, greater gains in Chinese stocks are likely because the reforms launched since the third plenum of the 18th CPC Central Committee of China are improving resource allocation and defusing risks in the financial sector. Consistent with Dr. Lin and Dr. Feng’s forecast, Dr. Huang projected that China’s economic growth rate will be seven and 3/10 percent (7.3%) in 2015 and is expected to rebound to seven and a half percent (7.5%) in 2016.
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 As a private, nonpartisan, and nonprofit organization established since 1966 focusing on fostering, among other things, the economic cooperation between the U.S. and China, the National Committee on United States-China Relations has hosted a well-respected annual China forecast forum for years.