chapter  6
17 Pages

Engine for sustainable growth

WithCai Fang

During the period from 2004 to 2010, China completed its crossing of the Lewis turning period; its growth rate slowed down obviously in 2012 and down year by year from then on. It must be recognized that this trend of growth rate slowdown is a natural result of potential growth rate’s decline, rather than the impact of demand factors. Economic policies not changing the growth potential but just concentrating on demand stimulus will give inappropriate guidance to subjects of economic activities, namely investors and entrepreneurs. After the outbreak of the world financial crisis in 2008, quantitative easing monetary policies with low interest rate and zero interest rate economic growth appear to be the life-saving straw which Europe and the United States as well as Japan have competed to throw out. Economists who have paid attention to growth have long found that differences between countries’ economic development levels are in the end differences of their productivity.