New Goals for China's Economic Development China has built a relatively well-off society by the end of the 20th century, transforming from a low-income country to a lower-middle-income one. In the first decade of the 21st century, China has further elevated itself to an upper-middle-income country. Based on these achievements, the country sets its new goals for economic development: a sustainable economic growth to double its scale, a high-income economy with a higher per capita GDP, a transformation in the economic structure and an overall modernisation. New Changes in China's Economic Development 1. The costs for different production (supply) factors has increased significantly, which means China can no longer depend on its low costs to compete in the international arena. Therefore, it is necessary to transform its development pattern, from its dependence on the expansion of investment in production factors to an economic growth powered by efficiency (including both factor efficiency and total factor productivity). 2. The major threat against a balanced economic development turns from increased demand to demand deficiencies, which mainly manifests in three aspects: a deficiency in investment, a deficiency in consumption and a decreasing boost from export demand to the economic growth which relies more and more on domestic consumption. New Features in China's Unbalanced Economics Since China took its baby-steps toward an upper-middle-income economy in 2010 at a time when the government began to retreat from its growth-stimulating policies against the 2008 financial crisis, new features of China's economic imbalance have emerged. The country now faces two risks: great pressure from inflation and a lack of demand to drive up the economy. New Directions for China's Economic Growth Adjustments in macro-economic policies can help to alleviate the short-term disequilibrium. However, the major threat of China's short-term disequilibrium and long-term unsustainable development stems from the structural conflicts in the economy. Therefore, in order to alleviate and efficiently control these conflicts, and to bridge the "middle-income gap", China needs to transform its development pattern. Its main approach is to make a strategic adjustment in the economic structure and to encourage innovation in technology and policies, which also serves as the drive for the adjustment. Only by deepening reform can innovation in policy-making be achieved; only by innovation in policy-making can technological innovation be pushed forward. With innovations in these fields, a further upgraded economic structure and a strategic adjustment to transform the development pattern can be achieved, which will ultimately bring about the new historical transcendence of China's economy and its sustainable development. Professor Liu Wei is executive vice president of Peking University in charge of humanities and social sciences, continuous education, sports and technology transfer at the university. He got his bachelor, master and Ph.D. degrees in economics at Peking University. Before the current position, he served as dean of School of Economics, assistant president and vice president of Peking University. He is also the chief editor of the academic journal Economic Science. His research interests include economic theories of socialism in political economics, economic transition theories in institutional economics, industrial structure evolution in development economics, and enterprise ownership. He was appointed as chief expert in the projects "Research on the Development of China's Market Economy" (2003) and "Research on China's Monetary Policy and Transmission Mechanism" initiated by the Ministry of Education of China. He was also responsible for the key project "The Trend of China's Mid-term and Long-term Economic Growth and Structure Changes" (2009) supported by the National Social Science Foundation of China. Professor Liu is also a member of the Theoretical Economics Section of the Disciplinary Appraisal Panels under the Academic Degrees Committee of the State Council, Vice Chair of the Steering Committee for Economics Teaching of the Ministry of Education of China and Vice Chair of Expert Committee on Discipline Development and Specialty Setup of the Ministry of Education of China. This video is in English. To see the Chinese version, please see http://youtu.be/FaNj0ReHh6Y

• published: 07 Jan 2014
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