Monday 2014/12/22

China

China Growth Faces Major Challenges, Say Experts

People holding newly-purchased iPad minis wait outside an Apple Store during the China launch for the product, in Shanghai, December 7, 2012. People holding newly-purchased iPad minis wait outside an Apple Store during the China launch for the product, in Shanghai, December 7, 2012.
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People holding newly-purchased iPad minis wait outside an Apple Store during the China launch for the product, in Shanghai, December 7, 2012.
People holding newly-purchased iPad minis wait outside an Apple Store during the China launch for the product, in Shanghai, December 7, 2012.
Analysts say although a recent U.S. intelligence assessment indicates China will emerge as a leading economic power in the near future, Beijing's economic growth faces several major challenges.

The assessment released Monday by the National Intelligence Council projected China to surpass the United States as the world's largest economy by 2030, forcing the U.S. to serve as what it called the "first among equals" on the world stage.

But the report said the rise of China, currently the world's second-largest economy, will be slowed if it cannot come up with a more sustainable, innovation-based economic model.

Patrick Chovanec of Tsinghua University's School of Economics and Management in Beijing agrees. He tells VOA that the growth rates driven by China's current export-led model are not sustainable.

"If China wants to produce more than it consumes, the rest of the world has to consume more than it produces. And the rest of the world really cannot afford to do that anymore - we see that reflected in the slowing growth of Chinese exports," he said.

Chovanec says another challenge is that China's growth is "extremely resource-dependent." And he says those resources, particularly water, are "becoming scarcer and scarcer."

Other economic concerns include the gender imbalance and rapidly-aging population created partly because of China's one-child policy. This has led many to fear that China will get old before it gets rich.

Jean Pierre-Cabestan of Hong Kong Baptist University says that many in Beijing know that major structural reforms are needed to maintain current growth rates.

"I think there's an awareness that the bold growth model that China has adopted and its one-party system should evolve and should move toward a more open, pluralistic political system and society. How long's it's going to take and what are the challenges ahead - those are the questions that are hard to answer," he said.

Many analysts point out that China's current political and educational system, which encourages and even enforces conformity at the expense of creativity, is stifling the innovation needed to unlock future growth.

But so far, China's Communist leaders have been reluctant to make rapid political reforms, because of what some say is fear that too much openness will threaten their single-party rule.
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Headline News Dec 19, 2014i
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19.12.2014
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