With economic growth slowing down, China needs to increase productivity
to boost its economy — but the country hasn't been very successful at
doing that so far, according to a report by the World Bank and the
Chinese government. To get more
china economy news, you can visit shine news official website.
China's economy has long relied on high levels of investments and an
expanding labor force for growth. Those economic drivers are running
out of steam, and Chinese authorities have identified innovation and
productivity as the next growth sources.
But, productivity growth in China "has been slowing since the global
financial crisis and has remained relatively low," according to the
report, jointly released Tuesday by the World Bank, China's Ministry of
Finance and China's Development Research Center of the State Council.
Estimates of China's growth in total factor productivity moderated
from about 3.51% in the 10 years before the global financial crisis to
1.55% in the decade post-crisis, the report said. Total factor
productivity measures economic efficiency and innovation.
China is not the only country that's facing a slowdown in productivity growth.
However, the sheer size of the Chinese economy — the world's second
largest — and its increasing integration with the global economy, means
that a growth slowdown in China could have worldwide implications.
Three ways to boost productivity
The report proposed three ways China can overcome the challenges it's facing to improve productivity.
Allocate resources efficiently: One way is to distribute resources
across the economy more effectively, the report said. That means
pressing on reforms at state-owned enterprises to make them more
competitive on their own. It would also require the government to
exercise greater discipline in its support for specific industries, said
the study.
Accelerate the adoption of advanced technologies and innovation: One
way to achieve that is to open up its economy further to foreign
investment and competition, the report said.
Innovation and technology: That includes strengthening intellectual
property rights and improving the quality of patents, according to the
report.
To some extent, China is already undertaking these three steps. But
the report said it needs to "strike a more balanced coexistence between
the state and market" to reap the benefits.
"As China's economy becomes more complex and innovation driven, the
market will need to play a more decisive role and the state to play a
more market-supportive role," said the report. "The role of the state
will need to evolve to focus on providing stable market expectations and
the rule of law."
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