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Government counselors on Chinese economy

Updated: Jun 22,2016 5:17 PM

“The only way out is to accelerate economic reform”

According to Xia Bin, counselor of the State Council, it is not reasonable to be pessimistic of the Chinese economy. Although in the short run, there are many obstacles, in the long run, China still has the largest potential to maintain smooth economic development among the five biggest economies in the world.

“Right now, China will not face the same kind of financial crisis the US did, but we still face risks. Therefore, the only way out is to accelerate economic reform, maintain the balance among development, reform and social stability,” Xia said.

“We must tackle structural problems instead of waiting for a solution”

Yao Jingyuan, researcher in State Council Counseling Office, believes that the current problem is structural rather than periodic.

“What is a periodic problem?” Yao explained, “Periodic problem is just like coldness in winter, it will pass when spring comes. So we can just do nothing but wait for the solution of periodic problems.

However, now we are facing structural economic problems, so waiting will not work anymore. We should tackle the challenge through deepening economic reform, especially supply-side reform.”

“Learn from other countries as well as considering China’s condition”

Apart from data and factual analysis, historical analysis is also important in researching the Chinese economy, said Hu Bengang, counselor of the State Council.

In developed countries such as the US, Germany, England and France, the slow down of economic growth is also inevitable in their histories. Currently, the economies of BRICS countries, which include China, Brazil, Russia, India and South Africa, are all going through the phase of transformation. “If we keep learning from other countries as well as considering China’s national condition, we will have a successful economic approach,” Hu added.

“Suitable comparisons should be made to evaluate the Chinese economy”

Counselor Chen Quanxun said that although the GDP growth rate has fallen to 6.7% in the first quarter of 2016, it is still a fast growth rate considering the size of the Chinese economy. As the largest developing country in the world, China should not be simply be compared with some small economies, he said. Because, unlike small economies, China has greater developing potential. Even if the industry and market in eastern China have been saturated, there is still a large market in central and western China.

“Consider the need for development when evaluating the economy”

Counselor Liu Huan said that for years we use the GDP growth rate to evaluate economic development, which leads to the pursuit of GDP growth. Many economic problems in China, such as imbalance of industry structure, excess capacity and environmental pollution all have connections with the “worship” of GDP growth.

Therefore, in the future, economic targets should be based on the need rather than chasing for GDP growth. From the perspective of economics, the objective of GDP growth is to provide material basis for social and economic development. We should pursue quality instead of growth rate in pursuing economic development, said Liu.