Source: Global Times Published: 2018-1-23
China has no ambition for global leadership and is soberly aware of the fact that there is still a big gap between it and developed economies, experts said on Monday.
"With certain hypotheses, it can be estimated when China`s total GDP volume can surpass that of the US, but China`s economic structure and development quality still lags behind the US," E Zhihuan, chief economist at Bank of China (Hong Kong), told the Global Times on Monday.
"Though China`s GDP growth exceeded 82.71 trillion yuan [$12.84 trillion] in 2017, it falls behind developed countries when it comes to GDP per capita. As a developing country, China still has a long way to go to realize the goal of establishing a modern economic system and industrialized society," said Wan Zhe, chief economist with the International Cooperation Center of China`s National Development and Reform Commission.
The comments came after various recent reports that have appeared to somewhat overstate China`s economic growth. For example, a recent report from London-based consultancy the Centre for Economics and Business Research said that China is likely to overtake the US as the world`s No.1 economy in 2032.
The Washington Post noted that China`s retail sales are expected to exceed those of the US in 2018, a "marker in China`s rise to economic superpower status."
In fact, China`s retail growth was not impressive in 2017. The figure slowed by 0.2 percentage points to 10.2 percent year-on-year, data from the National Bureau of Statistics showed.
Developed economies such as the US and Japan embarked on upgrading their consumption in the 1970s, but this trend has only recently emerged in China, Wan told the Global Times on Monday.
Consumption upgrading is expected to be crucial in the country`s economic structural adjustment, but challenges persist, she noted, adding that a growing income gap, reliance on policy support and poor services quality may curb consumption growth.
Besides, the internationalization of the yuan is still far behind what it should be, given the country`s economic and trade strength, E said.
The yuan ranked as the sixth-most actively used currency for domestic and international payments by value in November 2017, with a market share of 1.75 percent, according to a report from global transaction service provider SWIFT in December.
Areas of weakness
Although China is catching up with the US in terms of total GDP growth, it still can`t compare with the US in many aspects, according to experts.
Major problems in the country`s economy include low investment efficiency, heavy reliance on real estate investment and low research and development input, Wang Jun, chief economist at Zhengzhou-based Zhongyuan Bank, told the Global Times.
"Our country`s investment efficiency declines year by year. Currently, 1 yuan of GDP growth requires increased investment of 6.9 yuan, which is much lower than that of developed countries. This figure is also much lower than the level of 4.0 yuan from 1998-2007 in China," Li Wei, director of the Development Research Center of the State Council, said at a forum in Beijing on January 13.
Li said that China`s GDP per capita is only about 14 percent of the level in the US and 25 percent of the level in the EU.
The latest data from the World Bank showed that research and development expenditure took up 2.07 percent of GDP in China in 2015, compared with 2.79 percent in the US.
Steady growth in 2018
Looking into 2018, E predicted that the central government will maintain a balance between stable growth and containing risks, which will support relatively steady economic growth. She said China`s economy is expected to grow by 6.7 percent this year.
China has listed curbing major risks, eradicating poverty and controlling pollution as "three tough battles" in the coming three years.
Wan said that environment protection supervision - which has affected China`s economy in the past two years - will continue this year, but its marginal influence on the economy will weaken.
The challenges include the fact that domestic investment, especially private investment and property investment, is likely to continue to slide. This, together with potential deterioration in the external environment and increasing global trade protectionism, may drag down China`s economic growth, Wang warned.
Wan Zhe is a visiting fellow of Chongyang Institute for Financial Studies at Renmin University of China.