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[NPC &CPPCC] Justin Yifu Lin: We are Qualified to Reach the 6.5% Growth Rate

MAR . 24 2016

Peking University, Mar. 23, 2016: This year’s report on the work of the government pointed out that overcapacity reduction is one of the key points of the structural reform of the supply side. Justin Yifu Lin, member of the National Committee of the CPPCC, consultant of the State Council and honorary president of National School of Development of Peking University, holds that “the effective market and government” should be coordinated in order to achieve overcapacity reduction qualitatively and effectively through accepting the good and rejecting the bad.

In a CPPCC non-partisan group discussion, Lin states that it is very likely that China’s economic growth rate will reach above 6.5% in the “thirteenth five-year”.“If we can create space for structural reform and shore up the weak spots through investment, China can reach its economic growth target with a higher quality,” he said.

Lin believes that we are qualified to reach the 6.5% growth rate. The overcapacity problems mainly exits in middle and low-end industries and can be overcome by industry upgrades. These upgrading projects are beneficial and will attract investments. Although heavy investments have already been made in infrastructure construction, the main focus was on highways, high-speed trains and airports that provide connections between cities; infrastructures in cities are still scarce. China’s urbanization rate will increase one percent per year, providing new opportunities for economic growth.

3% is generally considered to be the crest of a government’s annual financial deficits rate. However, Lin believes that the situation in China is quite different. “In developed countries, national deficits are mainly used to pay for social consumption, such as unemployment compensation and public welfare, rather than to improve productivity. While in developing countries, national deficits are to stimulate investment. In China, a major part of national debts are used to resolve infrastructure bottleneck, and to invest in areas like environmental protection and urbanization. In the short term, these investments will create demands and increase employment; in the long term, they can improve productivity and build up assets. Because of the assets we possess, our net debt is not as large as it seems.” Lin believes that “as long as our debts are used effectively, our national debt rate can surmount 3%.”

Written by: Xu Penghang
Edited by: Li Ruiqi
Source: PKU News (Chinese)
Related links:
http://www.gov.cn/zhuanti/2016-03/08/content_5050875.htm