Since China's economic growth underwent a correction as expected in the second quarter after it reached a short-term peak period in the first quarter, some are concerned that the Chinese economy will have a steep falloff and even experience a double-dip recession. Fan Jianping, director of the Economic Forecasting Department of the State Information Center, considered such concerns as overly pessimistic.
Fan said during an interview with People's Daily that the downward economic growth trend is the result of the Chinese government's proactive efforts to moderate the overall economic stimulus policies and to step up the structural transformation policies in order to promote China's economy to shift from the crisis emergency state to the normal state as soon as possible.
He expected China's third-quarter GDP growth rate to be a little more than 9 percent, still higher than the entire year's macro-control economic growth target of 8 percent. According to the rolling forecast, the fourth-quarter GDP growth rate will further fall back to the level of 8 to 8.5 percent compared with a year earlier.
"Following the trend to slow economic growth and using the market mechanism to accelerate the transformation in the economic development mode will be a wise choice," Fan said. "The exit or the provision of no additional power for any country's stimulus policies in the post-crisis period will result in short-term "pains," and the short-term, high-speed growth brought about by the over reliance on the stimulus polices will instead be harmful for the long-term sustainable growth."
Meanwhile, given the energy efficiency and emissions reduction targets, it should proactively slow the economic growth to a bearable, proper level. Compared with the high-speed growth driven by blind investments in overproduction industries, this will be more helpful for China to achieve a stable and sound economic development and grasp the initiative in economic development.
As for China's interests in investing in overproduction industries, he believes that it is due to China's special investment and financial systems. He suggests that the government should be determined to speed up the investment and financing system reforms, transfer more resource allocation rights to the market and implement new policies encouraging private investments.
Early completion of the shift in economic driving forces will likely enable China to enter a new round of upward economic cycle that is driven by a domestic investment boom involving fixed equipment replacement.