Top Chinese Economist Warns Mainland's Growth Rate Not Sustainable | Voice of America - English
A top Chinese economist says his country can probably not sustain ever-increasing economic growth rates.
High levels of foreign investment and exports drove China's economy to grow by almost 11 percent last year, despite government measures to slow it down. Liu Shucheng, the head of the Institute of Economics of the government-funded Chinese Academy of Social Sciences, says China's past economic cycles suggest the economy is unlikely to grow much faster than that. "It may not be good for China to reach such a high growth rate of over 11 percent," Liu said, "since historical experience told us due to bottleneck constraints, economic growth may be unsustainable." Liu, speaking in Hong Kong Thursday, said the last time China's economic growth peaked was in 1992, when it reached more than 14 percent. He said this was followed by a steady decline in growth rates until 1999. He said that in the past, rapid economic growth led to shortages in raw materials, which hampered growth. Chinese officials in the last several years have been scouring the world in an effort to find enough raw materials to keep the current boom going. Beijing has been trying to cool down the economy, by raising interest rates and tightening lending. But the growth rate has continued to rise steadily, and Liu predicted that upcoming events, such as China's hosting of the Olympic Games next year, would maintain upward pressure on the economy for some time. "And besides, the hosting of the Olympic Games in 2008 and the celebration of the 60th anniversary of the founding of (the People's Republic of) China in 2009 may push up the economy into overheating," he said. The rapid economic growth, driven largely by massive exports, has led to friction with major trading partners such as the United States and the European Union - both of which have run up huge trading deficits with China. Officials in Washington charge that Beijing keeps its currency, the yuan, artificially low, reducing the prices of its manufactured goods and giving it an unfair trading advantage. U.S. Treasury Secretary Henry Paulson told the U.S. Senate Wednesday that he would push China to adopt a market-determined foreign exchange policy. Although the yuan has risen more than six percent since it was removed from its dollar peg in 2005, U.S. officials say the appreciation is still not enough.