Opinion
It will be another golden decade if ...
By Zhu Qiwen (China Daily)
Updated: 2010-03-01 13:29
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Three decades of nearly double-digit growth have made China into a unique economic miracle. Will it be able to continue its long-term growth story into the new decade?
The V-shaped rebound of the Chinese economy last year has seemingly convinced many observers to give their vote of confidence for the largest developing economy.
With its beginning as a poor developing country hampered by poverty and underdeveloped economies, China has ascended to the world's largest exporter and the third largest economy with a per capita GDP of about $3,500 by 2009.
There were plenty of bumps along the road. Yet, even the worst global recession in several decades did not stop the Chinese economy from expanding by 8.7 percent last year.
It is this resilience that has led people to believe that the country's catch-up story is far from over, though the size of its economy has already grown by so much.
Goldman Sachs economist Jim O'Neill forecasted last November that China will overtake the United States by 2027 - compared to a previous forecast of 2041 made in 2003.
Lu Feng, an economist of the China Center for Economic Research under Peking University came up with a bolder prediction. Based on the fact that the Chinese economy reached about $5 trillion by the end of 2009, accounting for 35.6 percent of the US economy, he reckoned that it is highly likely that the size of China's economy will exceed that of the United States before 2025.
China does seem to have a good chance of maintaining its rapid economic growth in the new decade.
First, fixed-asset investments will continue to serve as a powerful boost for economic growth as China presses ahead with urbanization and industrialization.
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The investment binge has given rise to domestic worries about overcapacity. Yet, since infrastructure construction such as high-speed railway and roads has taken a large part of the investments, economists argue that overcapacity will not become a serious problem anytime soon.
Some Chinese economists further point out that the last boom of infrastructure construction following the Asian financial crisis in the late 1990s had actually dismantled some supply-side bottlenecks. By doing so, it has enabled the Chinese economy to grow rapidly without triggering runaway inflation in the first decade of the 21st century.
As China's urbanization ratio remains below 50 percent and industrialization has yet to see its limits, growth of fixed-asset investments will more than likely remain healthy.
