The economy is tough enough to adapt to a lower growth rate without suffering a sharp slowdown provided there is sufficient support for innovative industries, some of the country’s policy advisers said on March 9.
“The government and enterprises have the ability to transform the development model in line with market changes, but the government should leave room for the market to self-adjust,” said Qian Yingyi, dean of the School of Economics and Management at Tsinghua University and a member of the Chinese People’s Political Consultative Conference.
The last thing the government should do is launch an aggressive stimulus policy that would only distort the economic balance by temporarily boosting demand, he said.
“We should not overwhelmingly rely on monetary policy,” Qian added. “The government can play a new role by reducing the need for administrative approvals and support the development of innovative industries, such as electric automobile manufacturing. Not by directly investing money, but by improving infrastructure construction.”
China’s economic growth rate slowed to a 24-year low of 7.4 percent last year, below the 7.5 percent target.
Premier Li Keqiang announced on March 5 that the 2015 GDP growth target is being lowered to 7 percent in order to adapt to the “new normal” rate of expansion. The property sector is experiencing a slowdown, and deflation has intensified in the manufacturing industry.
Li Daokui, an economics professor at Tsinghua University, suggested introducing deeper financial reforms to cut funding costs.
“The government should build a special fund for infrastructure project investment, and separate this money from commercial banks and trust companies,” he said.
“Local government debt needs to increase properly, and local governments can directly raise funds from the bond market for long-term construction.”
China’s mobile energy and thin-film solar power generation industry will become a new driver of the country’s economic growth with a predicted market value of eight trillion yuan ($1.28 trillion) within three to five years, said CPPCC member Li Hejun.
Li uses the phrase “mobile energy” to refer to the fitting of a power source such as solar panels to cars, clothing and objects that are carried, for example backpacks and mobile phones.
He is chairman of the China New Energy Commerce Chamber and president of Hanergy Holding Group, a Beijing-based energy company focusing on solar and hydropower.
He said mobile energy, as a green industry, is related to five of the nation’s new strategic industries－new energy, electric cars, new materials, high-end equipment manufacturing and environmental protection. Its development will transform the logistics and distribution methods of the traditional energy sector.
“The conversion rate of thin-film solar power generation has reached as high as 30 percent, which means the cost will fall as the usage scale grows in the coming years,” he said.
“Thin-film technology and mobile energy are not a concept, but a reality that is happening.”