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Decline of leading industries and the prospects for new normal growth (No 183, 2014)
2015-01-13
By Wu Zhenyu, Department of Macroeconomic Research, Development Research Center of the State Council (DRC)
Research Report No 183, 2014 (Total 4682)
Abstract:
A substantial growth drop in the three leading industries of mechanical and electrical product manufacturing, real estate and auto-making is a direct contributor to China's slowing GDP growth rate in recent years. When the economy saw high-speed growth, the three leading sectors had a positive correlation with economic growth but they are more likely to encumber the economic growth when the economy slows down. China, as a developing country aiming to maintain an economic growth rate of around 7 percent, needs to dig for opportunities in potential resources use and in technological innovation. Whether the growth target in the new normal period can be reached or not depends on whether China can foster some rapid growth industries to prop up the economy. In the future, in order to foster new leading sectors, efforts should be made in the following aspects: facilitating circulation of production factors in urban and rural areas; utilizing rural construction land in a highly-efficient way; developing commodity internationalization into across-the-board internationalization of commodities, services and production factors; allocating production capacity on a global basis; breaking down sector-based monopoly; setting free driving forces for growth by strengthening market-based principles; combining new technologies with traditional industries; and seizing industrial opportunities brought about by technological revolution.
