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)