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Market-oriented reforms help support China's further growth: expert

(Xinhua) Updated: 2014-09-11 16:22

WASHINGTON - China's economic growth over the past decades largely reflects the rise of market forces and private businesses with a change that can be seen in the country's economic structure, according to a leading expert on China studies.

Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, said at an interview on Wednesday that a significant transformation has already been seen in the Chinese economy.

Though the country's economic growth slowed down, the increase of employment remained robust, he added.

He attributed this positive change to the performance of the service sector, whose share of GDP had risen in recent years, arguing that because the service sector was labor-intensive, the economy could generate the same amount of jobs as before with slower economic growth.

The Chinese government "is trying to reduce the absolute priority to GDP growth", and began to talk about "quality of the growth" and emphasized more on the issues including pollution and food security, said the expert.

According to Lardy, Chinese Premier Li Keqiang's recent remarks on the importance of job market at the Summer Davos Forum in Tianjin were consistent with the government's promise of giving more priority to other things instead of GDP growth.

In regard to the widely-believed view that the Chinese economy was dominated by the state-owned firms, Lardy put forward his disagreements and contributed China's economic growth to the expansion of private businesses.

He said that "large part of Chinese economy is market driven and competitive." In this regard, the expert said "the US government should begin to think about changing its policy (regarding China's market economy status)."

"Treating China as an entirely non-market economy might have been a reasonable policy two or three decades ago, but I think it's not a reasonable policy today," said Lardy.

In his new book "Markets over Mao: the Rise of Private Business in China," the expert argued that China's growth largely reflects the rise of market forces and private businesses, saying private firms have displaced state-owned firms in wide swaths of the economy.

According to his research, China's private companies' fixed investment in manufacturing sector accounted for 73 percent of the country's total in 2012, compared with an 11 percent of share taken by the state-owned companies. Private companies contained 40 percent share in export by July, 2014 from about 20 percent in around 2006 with the share of state-owned firms dropped to 11 percent from around 20 percent during the same period.

According to the expert, private firms play an important role in the Chinese economy. They have become "the major source of economic growth, the sole source of job creation, and the major contributor to China's role as a global trader," said the expert.

Market-oriented reforms help support China's further growth: expert

Market-oriented reforms help support China's further growth: expert

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