Global Watch

Global Watch February 2003 special issue: CHINA 2015 The size of GDP will be about 90% of Japan's GDP(Full Text)

This report shows two scenarios of Chinese economic growth until 2015. The main scenario is an optimistic scenario; that is, China succeeds in the reform of economic structure without incurring any political and social risk. The risk scenario is a pessimistic one; that is, China fails in the reform of economic structure and faces a vicious circle in economic growth.

For the sustainable growth, Chinese economy needs to change from a "Quantity of growth" to "Quality of Growth" economy. In other words, it needs to change from "Export and investment driven" to a "consumption driven economy".

In the main scenario, the real GDP growth rate during 2001-05 will be annually 7.4% year on year, during 2006-10, it will be annually 7.2% year on year and during 2011-15, it will be annually 6.7% year on year.

The size of GDP in U.S. dollars, it will be 1.6 trillion dollars (8.277 yuan per one U.S. dollar) in 2005, 2.5 trillion dollars (7.788 yuan per one U.S. dollar) in 2010, and 4.3 trillion dollars (6.282 yuan per one U.S. dollar) in 2015 that will be about 90% of Japan's GDP size).

In the risk scenario, lack of domestic demand with excess capacity would strengthen the pressure of deflation, and it may obstruct economic growth for several years. In that case, consumption and investment would shrink spirally, the real estate price would be adjusted severely, and the unease towards unemployment and financial turmoil would strengthen.

In economic reform, the completion of an integrated social security system with a more effective labor market in the whole of China and relocation of the underemployment of rural labor should be given the top priority to be solved. And China has to pay attention to and takes some measures to avoid over-investment, which causes the decrease in capital productivity and is the ringleader of the bad-loan problem.