News Detail

Chen Long

Public Finance Research Briefing No. 37, 2022 (Total No. 772)

November 30, 2022

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 The next five years will be crucial for getting our efforts to build a modern socialist country in all respects off to a good start. Maintaining reasonable growth is of strategic significance. Judging from employment, utilization of resources and capacities, and levels of prices and development, China’s economy is projected to grow at 5.5%-6.5% in the next five years. To secure this goal, both defective expectations and impetus for long-term sustainable development should be addressed for higher efficiency of macroeconomic governance.

 

I. A forecast of 5.5%-6.5% economic growth in the next five years based on multiple dimensions and indicators

 

Economic growth potential is an important basis for setting economic growth targets. Potential growth prevails in academic circles as a key measure of economic growth potential and reasonable range. Theoretically, each economy is subject to a potential growth level calculated based on actual output and economic operation, which cannot truly reflect the future growth potential. This because the potential growth level hinges on development, not figures. It is not a fixed value, but closely related to macroeconomic policy. Scientific and rational macroeconomic policy will raise the potential growth level; conversely, if not applied properly, macro policy can drag down the level.

 

Therefore, it is quite limited to judge economic growth with the potential growth level alone. We should scientifically judge the potential and reasonable range of our economic growth using a series of indicators from multiple dimensions such as employment, utilization of resources and capacities, and levels of prices and development.

 

First, employment and utilization of human resources, which is a core indicator;

 

Second, utilization of resources and capacities;

 

Third, price index and inflation; and

 

Fourth, economic development level.

 

According to the above analysis, there is much room for China’s economic growth. Based on a low growth base of 3% in the first three quarters of this year, coupled with a series of development goals and tasks during the 14th Five-Year Plan period, by 2035 and to the middle of this century, China’s economy has the potential to growth at 5.5%-6.5% in the next five years.

 

II. Key measures to secure reasonable economic growth

 

There are problems and contradictions that beset our economic operation. To secure growth at 5.5%-6.5% in the next five years, we must maintain reasonably robust aggregate demand, strengthen dynamic investment management, increase central infrastructure investment, address defective expectations and impetus for long-term sustainable development, and adjust the structure through speed difference in development, so as to improve the efficiency of macroeconomic governance and achieve high-quality growth.

 

First, we should identify a reasonable range of investment growth and exercise dynamic management to stabilize the macro economy.

 

Second, under the overarching plan for national development, we should implement one hundred central infrastructure projects in the next decade to address the defective expectations and impetus for long-term sustainable development, thereby driving a virtuous circle of economic ecosystem.

 

Third, we should adjust the economic structure and debt structure through speed difference to improve the quality of development and the efficiency of economic governance.

 

 

(Author Affiliation: Chinese Academy of Fiscal Sciences)