Will China's economy hit an inflection point next year?
(People's Daily Online)Updated: 2006-10-31 14:40
Q: Will China experience an inflection point next year?
Wang Tongsan: In my opinion, no qualitative inflection point will occur in China's economic operations in 2007. Most people now agree that there the Chinese economy has been growing too fast. To correct this, we have implemented some necessary macro-controls which have been shown to be gradually effective over the last few months. Next year, the effects of macro-controls will be more obvious. It is expected that the economic growth rate will be around 10 percent in 2007, probably lower than the growth rate of 10.5 percent in 2006. This is a normal inflection point, not a turning point representing a qualitative change in the entire economic situation.
There are several pre-conditions for the creation of an inflection point that indicates a qualitative turning point in the economic situation. At present, these conditions, which include war, natural disasters or an oil supply crisis, do not exist in China.
Except for war, modern China has had experience dealing with all these other external factors and has taken certain precautions to guard against them. China's national strength is continually growing and it has a greater ability to deal with natural disasters. To avoid major economic fluctuations, China needs to prevent major policy failures and problems or mistakes in macro-control work. China has gained a lot of experience in macro controls over the past 20 years. It has a deeper theoretical understanding and mature practical skills. According to the sketch map of economic growth, the magnitude of economic fluctuations is getting smaller and smaller, unlike in the 1980s and1990s when differences of five percentage points appeared between two consecutive years.
Momentum behind three driving forces
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