Why China’s economic output has an unbalanced structure?

The top Chinese regulator explained why China’s economic output has an unbalanced structure and how to solve the economic problem in a recent article.

Guo Shuqing, Chairman of the China Securities Regulatory Commission (CSRC), wrote an article, titled “Adjusting financial structure to pave way for economy” on People’s Daily, China’s flagship newspaper on July 2.

According to Mr. Guo, China’s economic output has an unbalanced structure.

Among the three main industries, the entire third industry including financial industry has an insufficient development, and it only accounts for 43 percent of China’s GDP in 2011.

It is not a small gap compared with the advanced countries and middle-income countries, in which the proportion reaches 73 percent and 53 percent respectively, the CSRC Chairman wrote in the article.

It is even lower than that of many developing countries and below the world’s average level. The average number in 2008 is 69 percent.

“The abnormal structure of savings, investment and consumption well explained why the economic output has an unbalanced structure,” Mr. Guo wrote.

“The problem of unbalanced structure is rooted in a deep social, cultural, economic and political background.”

A significant reason, according to Mr. Guo, is that the factor market cannot give full play to its fundamental role in the resource allocation.

In order to create a balanced structure in China’s economic output, Mr. Guo urged the nation to break through some systematic obstacles.

“China should continue to deepen the reform, break through the long-standing systematic obstacles in such factor markets as labor force, land and capital and significantly enhance the efficiency of resource allocation,” Mr. Guo wrote.

Author: Li Zhenyu
Source: People’s Daily Online