Former World Bank chief economist Lin Yifu predicts China’s economy will grow at 8% annually for the next 20 years if the government pulls back support for state companies and loosens its grip on the country’s banks.
Income distribution must be widened and corruption reined in for industrial production, manufacturing, and retail sales to continue their expansion.
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Investment in infrastructure, upgrades in machinery and equipment, and increases in consumer spending have led analysts to predict a growth rate of 8.1% in 2013 over China’s 7.7% growth in 2012.
The pace of long term growth will be sustained by technological development, which is low-cost in developing countries.
Chinese banks must be allowed greater freedom to set their own interest rates. As it is, access to low-cost capital is reserved for state-run companies and the elite, sowing the seeds for corruption.
The Boyuan Foundation is a Hong-Kong non-profit group that has proposed a reform plan
for the next three years that would open China’s capital markets, cut tax rates, and allow local governments to issue debt.
Global economists expect the new Chinese leadership to push through
the badly-needed reforms.
Changes are expected to happen slowly but China will have little choice if it wishes to compete in the expanding global economy.