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 The Coming Rebalancing of the Chinese Economy (ZT) |
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TooSimple
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加入时间: 2006/03/19
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作者：TooSimple 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
China: The Coming Rebalancing of the Chinese Economy
Stephen Roach (New York)
China is sending the world an important message: A key mid-course correction in its development model is coming — a shift away from export- and investment-led growth to more of a consumer-driven dynamic. This change will not be abrupt but it will be an increasingly dominant characteristic of the Chinese growth outcome over the next five years. It is aimed, first and foremost, at providing greater stability to the Chinese economy. It will also have profound implications on the global economy and world financial markets.
I have reached this conclusion largely on the basis of very clear statements made by senior Chinese officials. It is also consistent with my own macro analysis of the Chinese economy. And it’s a conclusion that stood up well to a full-blown debate that I was part of during my recent visit to Beijing (see my 21 March dispatch, “Inside the China Debate”). The essence of the adjustment is actually very simple: A long-standing strategy of resource mobilization — powered by the recycling of a huge reservoir of domestic saving into an export- and investment-led growth dynamic — has now outlived its usefulness. Senior Chinese officials believe that the time is right to shift to more of a self-sustaining internal demand model, driven by private consumption. This rebalancing will not only enable China to deal more effectively with both internal and external imbalances, but it will also enable the reformers to turn their attention to the critically important quality dimensions of the growth experience that are now being actively debated inside of China (see Andy Xie’s 20 March 2006 dispatch, “China: Addressing Backlash Against Reform”).
China’s rebalancing imperatives are obvious. The economy has become far too reliant on two sectors — exports and fixed investment. Depending on the metric chosen — due to recent data revisions, a somewhat more ambiguous calculation than in the past — these two sectors now account for between 70% and 80% of overall Chinese GDP. And, as of this point in time, they are still expanding collectively at around a 25% annual rate. If those trends were to continue, the sustainability of the Chinese growth model would be at considerable risk. Years of rapid export growth have already led to serious trade frictions and heightened risks of protectionism. Moreover, a continuation of rapid investment growth could lead to excess capacity and deflation. Meanwhile, there is a clear and increasingly urgent need to boost private consumption, which fell to a record low of just 50.7% of Chinese GDP in 2005 — far below the 65% share that is considered the norm for a more developed economy. Similarly, the mix between capital-intensive manufacturing (47.3% of GDP in 2005) and labor-intensive services (40.3%) reflects yet another layer of distortions in China’s economy that biases its growth dynamic away from job creation — precisely the opposite of what a reform-oriented system requires. In order to rectify these imbalances and avoid their potentially destabilizing implications, a shift in the mix of the Chinese economy must now occur.
The Chinese leadership is going out of its way to inform its own citizens, as well as those in the broader global economy, that it will now push for just such a rebalancing. That was certainly the major thrust of the recently approved 11th Five-Year Plan, and it was also the main theme of the just-concluded China Development Forum (CDF) that I participated in last week in Beijing. Over the years, I have found the CDF to be invaluable in providing a window into the China debate. It is timed to take place within days of the completion of the National People’s Congress — the annual gathering of the Chinese legislature. The debate at the CDF is fresh and the message is relevant. It brings the Premier, together with several of the senior ministers and other leaders of the Chinese government, into open and active discussions with both the domestic and the international community. Since its inception in 2000, this relatively small conference has been used by official China to convey many important messages on the Chinese economy. That was the case of the pro-active fiscal stimulus unveiled during the global recession of 2000-01, the cooling down of an overheated Chinese economy in 2004, and the subsequent all-clear issued in 2005. In that context, and on the occasion of the passage of the latest five-year plan, I take the message of the 2006 China Development Forum as one that signals a very important milestone on the road to reform and transition.
The Chinese leadership stressed three important aspects of the rebalancing imperative — the first being a moderation of the overall growth objective. The new five-year plan calls for 7.5% average real GDP growth through 2010 — a marked downshift from the 9.5% average pace over the preceding 25 years. This should not be viewed as a worrisome shortfall but, instead, as an effort to raise the quality of China’s growth experience. My own sense is that the Chinese leadership has become increasingly concerned about the pressures that hyper-growth puts on its transitional economy. Bottlenecks in strategic materials have emerged as a serious problem in recent years, as have the related impacts of soaring energy prices. There are also worries that the blistering 10% GDP growth pace of the past three years has led to widening income disparities and environmental damage. These externalities of hyper-growth underscore stability concerns that could ultimately jeopardize reforms. This is where the Chinese leadership draws the line. While Premier Wen left little doubt that the Chinese leadership still placed a high priority on strong growth, he also said most emphatically at the CDF, “China will never backtrack on reforms.” A refocusing of growth objectives from quantity to quality should be viewed as an important means to preserve China’s commitment to reforms.
The second leg of the stool is the government’s pronouncement on the intent to rebalance the mix of GDP growth over the next five years. Ma Kai, Chairman of the National Development and Reform Commission, did the heavy lifting on this point — stressing the need to boost both the consumption and the services shares of Chinese GDP at the cost of lowering the portions going to exports and fixed investment. Clear recognition was also placed on the establishment of a safety net — especially social security but also rural healthcare and education. This was viewed as necessary to improve income security — thereby reducing the excesses of precautionary saving that continue to inhibit the expansion of private consumption. The math and time lags of the likely shift in the mix of Chinese economic activity are consistent with the announced moderation of the overall growth target over the next five years. That reflects the likelihood that the impetus from rapidly growing exports and investment should fade before the added support from consumption kicks in.
Financial reforms are the third leg to China’s macro rebalancing stool. The focus, so far, has largely been on banking reforms. But there are equally strong needs to push into the area of capital markets reforms — especially the development of a corporate bond market. Currency reforms have also been given considerable attention recently — especially in light of mounting bilateral trade tensions with the United States. Senior Chinese financial officials, in particular Governor Zhou Xiaochuan of the People’s Bank of China, have expressed concerns over the excessively rapid accumulation of foreign exchange reserves. The rebalancing of the real economy toward increased domestic consumption should lead to more rapid gains in Chinese imports and a related narrowing of its trade surplus. That will, in turn, reduce China’s current-account surplus, slow the excessive pace of foreign exchange reserve accumulation, and thereby relieve pressures on the currency and trade fronts. Rebalancing on the real side of the economy thus provides China with more leeway to broaden and deepen its financial sector reforms.
The implications of this rebalancing are likely to be profound — both for China as well as for the rest of the world. The tilt away from exports and investment toward consumption, along with the moderation of aggregate GDP growth such a rebalancing implies, could challenge many of the perceptions now held in the financial markets about the “China factor.” Three potential impacts strike me as most important:
* Commodity markets. A reduction of investment growth is likely to temper China’s impact on the demand side of many industrial commodity markets. In 2005, China accounted for around 25% of worldwide demand for aluminum and about 30-35% of global consumption in copper, iron, steel, and coal. As the pace of Chinese industrial activity slows in the years ahead, pressures on the demand side of industrial materials markets should ease — underscoring the downside risks to commodity prices at just the time when most investors have concluded that there will be no stopping the upside of a “super commodity cycle.” China’s efforts at energy conservation — a targeted 20% reduction in energy content per unit of GDP over the next five years — could well amplify the downside impacts on prices of oil and refined products markets.
* Currency and trade tensions. Courtesy of rebalancing, China may be more inclined toward RMB appreciation as a means to promote a shift away from the excesses of export-led growth. The extent of this appreciation will undoubtedly be dependent on the reform and stability of its financial system. Pro-consumption initiatives should also boost Chinese import demand — an outcome that should reduce China’s net-export surplus and thereby provide support for its major Asian trading partners such as Japan, Taiwan, and Korea. The combination of RMB appreciation and reduced external surpluses should play an important role in relieving the anti-China trade tensions now building in the international community.
* The Chinese consumer play. The Chinese consumer will not spring to life over night. But this is likely to be a major story over the next 3-5 years. Chairman Ma of the NDRC stressed that the emphasis will initially be placed on China’s labor-intensive tertiary industries involved in distribution and delivery — underscoring not only the opportunities for wholesale, retail, and trans-national shipping but also for e-based trade retail systems. Conditional on the improvement of income and safety-net support — a clear focal point of the new five-year plan — growth in the Chinese consumer products industry should move rapidly up the value chain from soft- to hard-goods over the next several years. Nor is China reluctant to open up its consumer markets to foreign participants; under the terms of WTO accession, foreign multinationals will be allowed increased access to retail trade opportunities within three years.
None of this is without risk, and the Chinese leadership is fairly transparent in identifying those risks. It all boils down to concerns over stability. This continues to be the key constraint on reforms and development in China — and it probably always will be. That’s especially the case due to the massive headcount reductions that have arisen from the dismantling of state-owned enterprises (SOEs) — reforms that have resulted in the shedding of over 60 million jobs by the state sector since 1997. Rapid economic growth has long been viewed as the major tool at China’s disposal to offset these massive headcount reductions. In that respect, China’s willingness to tolerate the slower 7.5% GDP growth trajectory over the next five years could be drawn into question. However, with SOE reforms now well advanced and the layoff pace having moderated recently to an annual clip of around 2 million workers per year, there is good reason to believe that China is now better able to withstand the impacts of this mid-course correction.
China remains the world’s greatest growth story. But there is far more to its transition and development than the sheer speed of an industrial growth dynamic. An important rebalancing is now at hand that will temper the excesses of the current strain of growth and insure the sustainability of a more balanced and higher-quality economy for years to come. That message came through loud and clear in the 11th Five-Year Plan and in the debate and exchange I witnessed last week in Beijing. Over the years, I have learned not to under-estimate the will and determination of the macro managers who shape the character of the Chinese economy. Time and again, they have made the right moves at the right time. I see no reason to doubt the wisdom or the execution of the coming rebalancing.
作者：TooSimple 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 The Coming Rebalancing of the Chinese Economy (ZT) -- TooSimple - (13016 Byte) 2006-3-28 周二, 02:51 (1083 reads)
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