Chinas Economic Prospects: 2006 2020 Li Shantong

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Chinas Economic Prospects2006 2020Li
Shantong
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Growth Prospects for 2006 - 2020

• Areas of uncertainty
• International
• Rise in protectionism
• Dollar crash
• Worsening terms of trade (cost of imports v.
  exports)
• Financial liberalization leading to volatility
• Domestic
• Savings patterns of aging of population
• Persistent rural poverty
• Sluggish employment generation
• Shortage in strategic resource reserve and
  environmental capacity will be of increasing
  constraints to economic growth

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2005-2020 Population Growth
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2000-2020 Population Growth
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The Challenges of Economic Development in the
Future
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The Challenges of Economic Development in the
Future
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Model Dimension

• 34 production sectors and 2 representative
  households
• 1 agricultural sectors, 24 industrial sectors, 9
  service sectors,
• 2 representative households by rural and urban
• 5 production factors
• agricultural land, capital, agricultural labor,
  production worker, and professionals
• Emission of Pollutant
• SO2, NOX,TSS, Soot

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Recursive Dynamics

• The benchmark year 2002
• Factor growth and accumulation
• Labor and land growth
• Capital accumulation
• Change in productivity

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Business-as-Usual

• Labor moves from agriculture to non-agricultural
  sectors at the rate of 1.21 percent per year
• Technological and intermediate input changes
  continue the trend of recent years
• Total factor productivity (TFP) growth follows
  the pattern of past 25 years, at 2.0-2.5 percent

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Optimistic Scenario

• Labor moves from agriculture to non-agricultural
  sectors at the rate of 1.36 percent per year
• Technological and intermediate inputs reflect
  increased demand for service and high technology
  goods the rate of value-added increases
• TFP growth rate of service sectors is 1percent
  higher than BAU in 2005-2010 and 0.5 percent
  higher in 2010-2020
• Energy utilization efficiency is 0.2-0.5 percent
  higher than BAU

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Risk Scenario

• Labor moves from agriculture to non-agricultural
  sectors at the rate of 0.91 percent per year
• Household saving rate is lower than BAU
• TFP growth rate is lower than the level of the
  past 25 years, at 1.5-2.0 percent

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Economic Growth and Structure 2002-2020 (,BaU)
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Economic Growth and Structure 2002-2020 (,BaU)
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Economic Growth and Structure 2002-2020 (
Optimistic Scenario)
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Economic Growth and Structure 2002-2020 (
Optimistic Scenario)
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Economic Growth and Structure 2002-2020 (
Optimistic Scenario)
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Economic Growth and Structure 2002-2020 ( Risk
Scenario)
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Economic Growth and Structure 2002-2020 ( Risk
Scenario)
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Growth Prospects for 2006 - 2020

• It is still possible for China to maintain its
  relatively fast economic growth in the next 15
  years.
• Numerous challenges confronting future
  development
• The opportunities and challenges in the next 15
  years will be not evenly distributed, and the
  period from 2005 to 2010 will be critical to the
  reform and development in China

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Growth Prospects for 2006 - 2020

• Sources of Growth 2006-2020
• In all scenarios, capital accumulation continues
  to drive growth
• Growth in TFP varies according to gains in
  efficiency
• Contribution of labor does not grow in any
  scenario (demographics)

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Growth Prospects for 2006 - 2020

• The industrial structure will continue to be
  adjusted and become more rational thanks to
  deepening industrialization and urbanization. At
  the end of the 11th Five-Year Plan, the
  proportions of the primary, secondary and
  tertiary industries could be 8.146.245.7.
  During the 2010-2020 period, the main changes in
  industrial structure will be higher efficiency
  and greater proportion of the service industry.
  The proportions of the primary, secondary and
  tertiary industries will be 4.845.649.6

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Growth Prospects for 2006 - 2020

• The simulation results indicate that if the
  national economy can post a coordinated and
  sustainable development, the damage of economic
  growth to the environment will be much smaller.
  Take 2020 for example. The discharge of the four
  major pollutants in the coordinated development
  scenario will be 2.7-12.3 percent lower than in
  the baseline scenario
• China still faces a possible slowdown in economic
  growth, the negative impact of trade frictions on
  import and export, the slower rate of capital
  accumulation and the higher system costs arising
  from system contradictions could reduce Chinas
  economic growth rate to about 7

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Growth Prospects for 2006 - 2020

• Returns to labor in 2020 relative to 2002
  (percent change)
• Agricultural workers stand to gain the most but
  also face greatest losses relative to baseline if
  risk scenario materializes

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Growth Prospects for 2006 - 2020

• Projected changes in household income in 2020
  relative to 2002 (percent change)
• Rural households stand to gain the most but also
  face greatest losses relative to baseline if risk
  scenario materializes