China's Economy Has Sufficient Power to Maintain Growth

"In the next five to ten years, the Chinese economy will have sufficient power to maintain rapid growth." Nicholas Lardy, a Senior Fellow from Peterson Institute for International Economics, recently told the "Economic Daily" reporter when participating in the British Royal Institute of International conference.

First Lardy made clear that he hold a highly optimistic attitude on China's economic growth. Lardy said that in China’s former reform process, market plays a more important role in the allocating resources. One of the most noteworthy phenomenon is the rapid development of the private sector. From the beginning of reform and open, the private sector developed from scratch, and rapidly increase in terms of volume and quality. Currently, the private sector has become the main source of China's economic growth, employment and investment increase. He believes this is an indispensable factor in China's economic success. Although the current Chinese economy entered a period of structural adjustment, but the development trend of the private sector has not changed, instead, its development has been enhanced to some degree. This will provide the impetus and support for China's future economic growth.

On the future development of China's private economy, Lardy believed that the current government's economic reform in China provided a huge space and incentives. First, the Chinese government further lowered the threshold of private enterprise establishment. Lardy believed that the Chinese government has not only simplified the administrative procedures to create a company in China, but canceled the limitation of a company's minimum registered capital. The Chinese government made a lot of policy adjustments and reforms to reduce administrative examination and approval, and encourage private sector development, which provided a favorable policy environment for the further rapid development of the private economy. Affected by this, in the past two years, a large number of newly registered private enterprises began to emerge in China.

Meanwhile, as China has made efforts to "Develop Mixed Ownership Economy", private sector development space will also be further expanded. Lardy believed that the current Chinese state-owned enterprises occupy important position in the energy, financial and telecommunications sectors, but this is changing and the change is favorable to the private sector. At present, more and more industrial sectors began to open to the private sector. Lardy also told the reporter in an interview that Chinese Private Enterprises had huge space for development. The rapid development of the private sector in the future will further enhance allocative efficiency of the economic factors, the return on capital and the efficiency of state-owned enterprises. This means that the total output of China's economy and overall labor productivity will be significantly enhanced in the future.

Lardy stressed that in the reform process over the past 30 years, the Chinese government continued to enhance the role of market in resource allocation, China's still in the reform process currently. under the circumstances that the private sector’s ROI and production efficiency has been improved significantly, the reform provides power and space for the development of the private sector. Therefore, China has the ability to maintain labor productivity and efficiency of all economic sectors, China won’t fall into the so-called "middle income trap", but will enter the ranks of high-income countries, after a new round of rapid growth in the future. (www.chinainout.com)