Dismissing concerns over Beijing's first onshore default, Chinese economist Jianye Wang pegged China's GDP to grow at 7.5 percent in 2014-2015 while addressing a session at The Growth Net here today.
China's first onshore default has ignited debate over the increasing number of Chinese companies whose debt has doubled their equity in recent years. There are growing concerns among investors and policymakers with regard to huge size of shadow banking-estimated at US$ 7.5 trillion-and the slowdown in overall economic activity.
Reflecting on these issues, a panel of experts discussed the prevailing economic situation in China, and the ability of the Chinese leadership to facilitate the shift towards a different economic model without affecting sustainable growth.
Jianye Wang, Visiting Professor of Economics, New York University Shanghai and former Chief Economist, EXIM Bank, China said, "Chinese GDP will be around 7.5 percent this year, which will be good for the economy. However, true development cannot be merely single-minded GDP growth. At present, China's main focus is on creating jobs in tertiary service sector. The latest statistics suggest that service sector growth in China last year out-rated the manufacturing sector."
Christer Ljungwall, Science Counsellor, Swedish Agency for Growth Policy Analysis, Embassy of Sweden, said, "There is a need to make political economic system efficient and flexible. China can handle the practice of shadow banking but the real in danger lies in informal banking."
Ronnie Chan, Chairman, HangLung Properties Ltd., Hong Kong, asserted "The problem of shadow banking has been efficiently handled in the past, despite the dearth of resources in China. Contrary to what many countries feel, China is not a free market economy."
Gadi Ariav, Resident Scholar, IIM Bangalore and Associate Professor and Head, Max Perlman Center for Global Business, Recanati Business School, Tel Aviv University, Israel said, "Despite the high GDP growth, the per capita income is roughly just 1/3rd of Israel due to population explosion. Chinese economy is very complex, but the country is taking a pragmatic stand which is surprising. Integrating technology with employment is a political dilemma prevailing in every country, including China.
