Chairman of the PRC Si Jinspina may be chances to achieve for the country of domination in the world economy, but there are serious obstacles, writes CNBC with reference to analyst assessments.
In recent years, China’s economic growth began to slow down. “The key factors that really contributed to the phenomenal growth of China, now either have a less serious influence, or disappeared at all,” said Professor of the Harvard Institute of Public Administration Tony Zashi.
He indicated that the country’s population aging, and China could no longer rely on foreign direct investment. The Chairman of the PRC will not be easy to send financial resources into more productive parts of the economy, the specialist believes. The most serious support of GDP growth and employment level in China has a private business, and state banks are dominated in the financial system, which prefer to lend also state-owned enterprises. Official Beijing often mentions the problem of financing in his statements, but how effective its steps in practice is unclear.
There are risks associated with growing tension in relations with such trading partners as the United States, and the Chinese authorities speak with statements about the need to increase demand within the country and to develop technologies on their own. This will be more complicated than the previous goals for the growth of the GDP of the last years, Yuen Yuen An from the University of Michigan notes. She noted that innovation “it is impossible to plan from above.”
Director of Asia programs in the German Foundation Marshall in the USA Bonnie Glaser, in turn, believes that the biggest challenge for China will be the so-called “middle income trap”. This is a situation in which a country achieved significant growth due to cheap labor, comes to stagnation and cannot provide an increase in wages and the further development of the economy.
another of the difficulties faced by China, it turned out to be significantly increased debt. Beijing tried to cope with a high level of obligations, however, due to the coronavirus crisis, the work in this direction had to be suspended. The authorities decided to simplify the receipt of loans for business on the background of a pandemic, and in the end it turned into problems for the banking system.