Consumption to be new growth driver
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China's economic transition hinges upon boosting domestic demand and a sustainable green growth model, business executives and experts said Tuesday at a forum in Beijing.
The economy is gradually moving towards consumption from investment, partially due to the country's demographic changes, Li Jiange, chairman of the China International Capital Corporation, said at the 21st Century Forum, an event held every five years by the Chinese People's Political Consultative Conference (CPPCC) since 1996.
The country will see a decline in its labor force as the population ages, which will result in a reduction in the overall saving rates, Li said.
The official data from the National Bureau of Statistics showed in the first half of the year the contribution of consumption to gross domestic production (GDP) growth was 35 percent, compared to the near 60 percent investment contribution.
The country has been urbanizing for several decades, and now domestic demand needs to be bolstered while simultaneously raising living standards of rural residents and enhancing social security benefits, said Liu Yonghao, chairman of New Hope Group, an agribusiness tycoon.
The country has already taken measures to boost rural domestic demand, cutting reli-ance on exports, said Li Daokui, an advisor to the People's Bank of China.
Li expected the rate of trade surplus over the GDP to further fall to 2-3 percent this year, compared to roughly 10 percent three years ago.
China is not likely to maintain an annual economic growth rate of 10 percent in the next 50 years, said Michael J. Boskin, a professor of Economics at Stanford University and a senior fellow at the Hoover Institution.
China's energy demand will increase at a faster pace than other countries due to its rapid economic growth, which means the government needs to enhance supervision over energy production and consumption, Boskin said, adding policy-makers have to protect the environment by moderating the rate of growth.
Attaining green growth is not easy, but would help China avoid pitfalls other countries encountered during their development, he commented.
Li, the central bank advisor said no country has realized low-carbon economic growth. A shift to green economic development needs efforts from all countries involved, he said.
