China 2030 by Anganh Hu, Yilong Yan, Xing Wei
Despite periodic fears of a hard landing and credit crisis, China remains one of the fastest-growing economies in the world. While real GDP growth has slowed compared to the levels seen in the past decade, the Third Plenary Session of the 18th Communist Party of China Central Committee saw the government pledge to carry out a reforms over the next decade, aimed at giving markets a decisive role in the economy and ensuring growth.
In China 2030, Anganh Hu, Yilong Yan, and Xing Wei address the future major developments and trends that will define the Chinese economy over the next 20 years, and the next leg of what they call the Chinese “golden age”.
Modernisation, socialism and culture are, according to the authors, the three pillars in China’s roadmap, which is defined as a “path to socialist modernisation with Chinese characteristics”. While factor productivity and human capital growth are identified as the key drivers of growth over the next decade, Mssrs Hu, Yan and Wei believe that the strength of China lies within its “superior” socialist system, which allows productivity to develop faster and higher than in capitalistic economies.
Claiming that neo-classical growth theory is unable to provide an accurate forecast for the future expansion of China, the authors looked at the experience of Mao Zedong and Deng Xiaoping to draw the development plan of China up to 2030. In 2025, China is forecast to reach its peak population of 1.395bn, after which it will undertake a period characterised by an ageing population and low birth rates. This potentially poses a threat to the benign scenario depicted by the authors. But in their view, a higher ratio of employed population will offset the negative effects of an ageing population, allowing China to achieve average growth rates of 8 per cent between 2011 and 2020 and 7 per cent between 2021 and 2030.
While services will slowly replace industry as China’s biggest contributor to GDP, according to the authors, the inequality between rural and urban areas will have to be addressed to reduce political and social differences and boost common prosperity.
With countries around the world putting pressure on China to adopt more stringent pollution standards, the country’s environmental policies and challenges are also extensively addressed by the authors.
Recognising the central role China plays in global energy consumption and production, Mssrs Hu, Yan and Wei, assert that in the next 20 years China will undertake to become “greener”, including protecting water resources and reducing ecological degradation.
While the book offers interesting insights into the socialist vision of China’s long-term outlook, some of the economic arguments could do with a more rigorous fundamental foundation.
Published by Springer
Simona Gambarini is a research analyst at ETF Securities
