Update 24 February, 2014
The following material is largely derived from Dr Linda Yueh’s book: China’s Growth: The Making of an Economic Superpower. In Dr Yueh’s view, supported by detailed statistical analysis and examination, China needs to re-balance her economy in order to achieve its full economic potential.
- Increase internal market and reduce dependency on exports. This is slowly coming to bear and is highly dependent on the next factor.
- Increase consumption, reduce savings. As this recent article by Reuters shows, this is probably not going to be an issue with the new generation of Chinese who are spending and not saving – http://www.reuters.com/article/2013/04/18/us-china-consumer-2020-insight-idUSBRE93H18K20130418
- Increase private sector and reduce SOE. This is happening gradually and the pace needs to be increased. SOE is already down to between 30% and 50% of the economy. But there are concerns that in fact the pace is slowing and possibly reversing – http://www.economist.com/node/21564274
- Increase innovation and reduce imitation. On the face of it China is charging ahead with patents and new technology – https://chindia-alert.org/prognosis/how-well-will-china-and-india-innovate/ But some experts suspect the quality of the innovation. See also our section 6.4 on Chinese innovation.
- Increase opening up and globalizing of Chinese firms. The former is happening slowly, but the latter has yet to make an impact.