From High-Speed Growth to High-Efficiency Growth: Economic Transformation and Reform of Supply Mechanism

Abstract

China continued its 2012 economic development momentum in 2013 and is expected to have an increase of 7.6 % in economic growth and 2.5 % rise in CPI this year. It will continue to face the pressure from structural slowdown and many challenges in 2014. Only through stabilizing fiscal and financial structures to gradually release accumulated risks could economic structural adjustment be smoothly achieved. Therefore, the year 2014 will be another year for economic structural adjustment, reform promotion, steady growth achievement and risk control and management. The long-term economic growth in 2014–2018 will undergo a transformation from structural acceleration during the period of industrialization to structural deceleration during that of urbanization. Such transformation is characterized by a series of supply-side variables such as demographic change, urbanization, increasing attention to social welfare, which will dominate China’s economic growth rate in the future. It is estimated that, according to an analysis of the scenario, the simulation value for China’s potential economic growth rate in 2013–2018 is 6.4 %. From the assessment of sustainable development and transformation and the upgrading of China’s provinces, regions and municipalities, improvements in the index for the prospect of development and continuous enhancement in the quality of economic growth sustainability for all of China’s provinces, regions and municipalities has been found; however, some setbacks, or even drops, were found in the same index for central and western China as well as for China on the whole. China’s current transformation from industrialization to urbanization corresponds to the great importance of indicators such as the level of urbanization and insurance for endowment, unemployment and medical care and other indicators which are closely related to urbanization. In view of the conditions of economic development in 2013 and the long-term challenges for China’s economic development from 2014 to 2018, it is necessary to adopt supply-side macroeconomic management polices to tackle the decrease in its potential economic growth rate; these policies include (a) refining the competitive market, (b) improving the relative price system, (c) the transformation of its mobilized economy, (d) the enhancement of the efficiency of its structural transformation, (e) decrease in the input cost of supply elements and (f) the establishment of a social security system suitable for conditions all over China China’s national conditions.