Download The Shape of China’s Future Growth

The Shape of China’s Future
Growth
KC Kwok
8 September, 2008
Many of the success factors
have/about to run their course
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Low cost, export-led growth
Investment-led growth
Emphasis on manufacturing
Catching up with technology
Quantitative expansion, crude growth
Growth comes first
The capacity of the world to accommodate
China’s growth
Unbalanced economy
• Increasing disparity between
– urban and rural
– the east and the west
– haves & have-nots
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Investment driven growth
Dominance of public sector
Environmental degradation
Increasing trade surplus and foreign
reserves
Changing the mode of economic
development
From
• “Fast & good quality”
• Low cost as competitive
edge
• Emphasis on
manufacturing
• Attracting in
• Economic growth comes
first
To
• “Good quality & fast”
• Raise innovative
capability
• Improve economic
structure (develop
services industries)
• Going out
• Harmonious society;
improve citizens’
livelihood; enhance
administrative capabilities
Key ongoing reforms
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Further administrative reform
Fiscal and taxation reform
Financial market reform
SOE reform & facilitating non-state sector
development
• Development of factor markets
• Build up social security system
• Incentive system for environmental
improvements
Financial market reform &
development
• Financial market reform & development
lagging behind rest of the economy - costs
and risks
• Benefits of financial market development
• Role of Hong Kong
• Relationship between HK & Shanghai
• Other financial centres
Need to grow the private sector
• Public sector still getting a disproportionate
share of China’s growth
– SOE dominance in many sectors
– rising share of government revenue in GDP
– rises in asset value accrue largely to public sector
• The development of private sector helps to
– improve efficiency
– increase private investment
– increase consumption of services
Regional development
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Yangtze River Delta
Pearl River Delta (Pan PRD)
Bohai region
Revitalizing the Northeast
Developing the West
Rise of the middle
Taiwan Strait economic region
Other sub-regions
Medium-term growth drivers
• Demand side drivers
– Quantitative and qualitative improvements in
consumption
– Urbanization
– Investment in infrastructure and industrial
upgrading
• Supply side drivers
– Further liberalization of economy
– Economic re-structuring
– Further reform of government
Guangdong-HK economic
integration
• complementary economic relationship
under “one country, two systems”
• momentum for further cooperation
– GD’s economy is at a turning point
– GD is HK’s market, hinterland & possibly
conduit for the rest of China
– HK is Guangdong’s international contact
– HK’s services capabilities could help GD to
restructure its economy
– HK’s public services are something GD could
learn from