The era of double digit high growth rate of China for over three decades that made it the world’s second largest economy is over and it has to settle for declining GDP and rise in trade deficit from now on, Chinese economists have warned.
China’s GDP could go down to around 8 per cent, as it is set to revamp its economic system to adjust to global downturn of exports, the main stay of its economic rise, Li Yang, vice- president of the Chinese Academy of Social Sciences, a government think tank, said yesterday, at a forum held by Caixin Media, a business news group here.
The coming slowdown will be a normal outcome as the continuous global downturn hurts China’s exports, while it is striving to adjust to the development pattern based more on domestic consumption, Li said.
He said the country’s annual average growth rate is likely to slow to between 8 and 8.5 per cent in the coming 10 years, while expecting the country’s annual trade surplus to account for less than 2 per cent of its GDP this year.
For over three decades, China has posted over 10 per cent of GDP. Its GDP expanded 10.4 per cent in 2010 as it emerged second largest after US over taking Japan.
The growth slowed to 9.1 per cent in the third quarter of this year from 9.5 per cent in the second quarter and 9.7 per cent in the first quarter.
Liu Shijin, deputy director of the Development Research Centre of the State Council, said China will head towards a lower growth rate over the next few years but the slowdown “is nothing but a good thing”, as it marked the end of the industrialisation phase.
China will post an annual growth of above 9 per cent this year and should be able to maintain growth of around 8.5 per cent next year, Liu said.
Stabilising economic growth should remain a major target for the government in the coming years, he said.
He warned some risks that were previously accommodated by high growth but could be unleashed when growth cooled.
These risks included local government debts, property price fluctuation, and massive losses that might appear in industries that had excess production capacity.