BEIJING: China should be able to sustain an economic growth rate of about 5% in the coming years by achieving a relatively high growth in total factor productivity (TFP), as the country accelerates efforts to foster new quality productive forces via technological innovation alongside reform and opening-up, says a renowned economist.
Liu Qiao, dean of Peking University’s Guanghua School of Management, said in an exclusive interview with China Daily that “China is an undeniable candidate to make a growth miracle”, in contrast to some speculation that the country’s economic development has peaked.
Liu said that such speculation stems from a pessimistic estimate of China’s TFP growth. The TFP is a measure of productive efficiency, measuring how much output can be produced from a certain amount of aggregate inputs.
Historically, Liu said, it has been difficult for an economy to maintain a high TFP growth after it completes industrialisation.
Even the United States, which boasts the world’s largest investments in basic research, had a TFP growth of below 1% over the past 40 years, which led to its long-term economic growth rate being only around 1.5% to 2%.
However, there are fundamental differences between China and US economic growth models, Liu added, meaning that China – unlike the United States – still has a huge industrial system and enjoys vast investment opportunities brought about by re-industrialisation, digital transformation and energy transition.
Official data show that China’s manufacturing output accounts for around 27% of its gross domestic product (GDP), whereas in the United States it stands at about 11%.
Also, Liu said China’s per capita GDP is around US$12,000, which means there is huge development space left.
Therefore, Liu said China should be able to maintain an economic growth rate of around 5% in the coming years if it can bring its annual TFP growth from the current level of about 1.8% to a level of above 2% by boosting technological innovation, deepening reform and opening-up and developing new quality productive forces.
“This will help the country realise basic socialist modernisation by 2035.”
In an earlier interview with China Daily, Steven Barnett, senior resident representative of the International Monetary Fund in China, also recommended that China should carry out more reforms to give the market a more decisive role in order to lift long-term growth prospects. — China Daily/ANN
