Chinese premier: high consumption and high investment is an ‘old’ model

Economists have warned that China has a choice between a short-term growth economy and one that grows sustainably.

Commentators will be watching closely as government officials, academics and multi-national business leaders from 90 countries across Asia meet at the Summer Davos Forum in Dalian on Wednesday to discuss solutions to global issues and risks.

Writing in the Financial Times, China’s premier Li Keqiang said, “[The Chinese] economy will maintain its sustained and healthy growth and China will stay on the path of reform and opening up”, stimulated by an economic-slowdown.

He added, “We can no longer afford to continue with the old model of high consumption and high investment. Instead, we must take a holistic approach in pursuing steady growth, structural readjustment and further reform.”

State economist Fan Jianping criticised the Chinese government’s inconsistencies in setting rates of annual growth, saying, “Why should the target be changed every year? It shouldn’t happen.”

Fan predicts the Chinese will pitch growth rates in between 7-8%, which is in line with the five-year plan for economic growth.

Li said that by cutting growth rates, the government, business leaders and society could work together to tackle the “fundamental problems” that could hinder sustainable growth, such as economic infrastructure, insisting that “reform remains the driving force” to economic growth.

China’s economy has been blasted as unsustainable in recent years due to the carbon emitted from its energy sector, though countries such as the US emit more per capita. The Chinese State Council recently announced however that it would be tackling this issue head on, making energy efficiency a“pillar” of its economy.

Further reading:

China to make energy efficiency a ‘pillar’ of its economy

China slower GDP growth ‘a clear sign of distress’

China: economic supremacy at any cost or global environmental leadership

Death to the polluters