Business / Economy

Economic prospects bright despite shifting demographics

By WU YIYAO (China Daily) Updated: 2015-05-26 09:24

Despite changing demographics and shifting growth patterns, China's economic prospects in the next decade remain positive as the industries continue to climb up the value chain and open to the international market, said economists and experts at the Shanghai Forum, hosted by Fudan University, which ended on Monday.

"Many people hold negative views of China's economic growth prospects in the coming decades, given that China will be an aged society by 2030, spelling an end to the 'demographic dividend."

"But China can take many measures before then that will have a positive effect on economic growth," said Yao Yang, professor at the China Center of Economic Research and the National School of Development, Peking University.

China's enterprises and policymakers have already taken steps to accelerate economic transformation and boost growth, as well as achieve a higher position on the global value chain, said experts.

The Belt and Road Initiative to strengthen connectivity among Asia, Europe and Africa will help China open to the global market in multi-faceted way, said Xu Mingqi, an economist at the Shanghai Academy of Social Sciences.

In terms of infrastructure projects based on the Belt and Road Initiative, China can not only cooperate on trade with the rest of the world but also enable all parties involved to leverage financial opportunities amid the process, said Xu.

"Free trade agreements between China and other countries will change the patterns of multilevel value chains, and liberalized trade will be extended to liberalized investments," said Yuan Tangjun, economist and director at the Center for Asian Economic Research, Fudan University.

Given these trends, China has to upgrade its manufacturing sector and look for new markets outside its traditional export destinations, said Yuan.

"China may leverage its existing capital and investments to cultivate brands and enterprises that are on the upper end of the value chain.

While some enterprises focus on manufacturing, other enterprises may emphasize designing and branding like Apple Inc has been doing. Under that model, China's enterprises and brands will have more influence," said He Shuquan, professor of international business and economics at Shanghai University.

Experts said capital should be directed to boost social welfare, which may in turn make economic growth more efficient in such ways as improving transportation.

Investments in healthcare, education and care for the elderly will also be in great demand, given rising incomes, higher living standards and a shift in the economy away from cheap credit to innovation and research.

China has witnessed steady and stable development of the local debt, bond and stock markets, which is significant for the nation's future economic growth, said Adam Posen, economist and president of the Peterson Institute for International Economics.

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