2010-06-29 07:53

China's economic transformation will not only lay a solid foundation for domestic development, but also lead to the sound development of the world economy.

As the world's third largest economy, China's economic transformation, aimed at "expanding domestic demand and readjusting economic structure" will increase domestic consumption and boost imports, which in turn will facilitate a rebalancing of world finance and trade.

Moreover, by upgrading the nation's industrial structure and utilizing more clean energy sources, its carbon-intensity is certain to decline. This will be of far-reaching consequence in the fight against global climate change.

The next decade will be crucial in the nation's second phase of reforms, with growth model transformation as its main thread. This transformation will greatly affect China's development in the coming several decades.

To accelerate this transformation process and achieve sustainable development goals, the nation not only needs to rebalance investment and consumption, and expand domestic demand, but also make long-term arrangements to align with its changing demographic structure.

The concrete changes required include transforming from an export-oriented model to dependence on domestic demand; from an investment-driven model to a consumption-led model; from a carbon-intensive model to a low-carbon economy; from a government-dominated model to a market-oriented pattern, and finally, from pursuing non-equilibrium growth to a relatively balanced development.

Since 2009, the Chinese leadership has shown plenty of determination to transform the growth pattern on various important occasions.

For example, the State Council is evaluating a project aimed at accelerating strategic emerging industries; the widely-anticipated tri-networks integration plan has been finally released; and income allocation system reform is progressing steadily.

The progress seen in efforts to achieve this economic transformation has convinced many that China will not give it up half-way through.

Transforming China's economic growth pattern, which is a complicated endeavor, needs simultaneous structural reform in other related fields, including corporate governance at state-owned enterprises, and improvements to its fiscal, taxation and government administrative systems.

However, the transformation will struggle to take root without major institutional breakthroughs.

The author is an economist with the State Information Center.

(China Daily 06/29/2010 page8)