Increased consumption and the new economy predicted to drive China's growth

Top economists in China have predicted that increased consumption and the growth of the new economy will be the most significant drivers of China's economy in the next ten years.

Tencent's fintech think tank on Wednesday released a report based on a survey of 103 chief economists in security traders, analysts of official organizations, and professors in universities.

About 45 percent of interviewees recognized increased consumption as most important for the development of China's economy in the next decade, while another 31 percent favored the new economy, such as internet-related business.

Only four percent said the real estate industry will drive the nation's economy.

The driver of high-speed economic growth is export and investment, but as we are transforming to a high-quality development model, consumption plays a more important role, Shen Minggao, chief economist at GF Securities, said at a meeting in Shenzhen on Wednesday.

Shen predicts the growth rate of export and investment will continue to decrease to less than five percent this year.

Data from the National Bureau of Statistics showed total retail sales of consumer goods exceeded 38 trillion yuan in 2018, up nine percent compared with the previous year. Consumption meanwhile accounted for 76.2 percent of the nation's GDP, a year-on-year rise of 18.6 percent.

Fan Gang, president of the China Development Institute, a Shenzhen-based think tank, echoed that increased consumption and independent innovation will be the key drivers.

Our saving ratio is falling and the level of consumption is bringing a new chapter, which will also push the emergence of new industries, such as care for the elderly and leisure activities, he said.

However, Yang Delong, chief economist at First Seafront Fund, said that 2019 also faces the challenges of external pressure and downward headwinds.

"More policies of tax and fee reduction will be carried out this year," he predicted, saying it is crucial to deal with current difficulties in business operations and inadequate consumption.

About 45 percent of economists in Tencent's survey said that China residents' overall taxes will decrease in five years, while more than 60 percent expecting corporate taxes to fall as well.

In the new economy sector, the survey found that 66 percent estimate a very high possibility of China achieving key breakthroughs in artificial intelligence and biotechnology.

As for blockchain and digital currencies however there remain disputes as to their applications, with the most important issue to be addressed being the security of users' private information.

Chip technology, something closely related to AI and internet industries, still needs long-term, innovation-driven development. The majority said it will take 10-30 years for China's chip industry to develop independently.

Other findings include that 85 percent of economists worry elderly care will become a critical social problem, but most – 60 percent – count on a better environment in China five years from now.