為什么中國(guó)投資導(dǎo)向的經(jīng)濟(jì)增長(zhǎng)模式不可持續(xù)

Abstract：China’s economy has achieved great success during the last three decays. This greatly attributed to the investment-driven economic model. But now， this kind of development model seems unsustainable. The investment-driven model waste energy， widen the income gap and pollute the environment. China wants to rebalance from investment driven model to consumption-driven model.

Keywords: investment-driven rebalance consumption-driven

China has experienced great development during the last 30 years and been regarded as an economic miracle in the world. When we turn to China’s economic growth model， we know that China relies heavily on investment and export， especially on investment， but the consumption rate in China is very low. In 2009， consumption accounted for 35.0%% of GDP， and investment accounted for 48.6%. Compared with other developing countries such as India whose consumption rate is 56.0% and other developed countries such as America whose consumption rate is 71.2%， China’s consumption rate is extremely low. I would like to explain why the investment-driven model is unsustainable.

Resources cannot be effectively allocated

First， when China relies too much on investment and production， but the level of consumption cannot follow， there will be a high risk that the resources cannot be effectively allocated. The resources we used to produce products cannot be consumed are wasted. In the global economy， we can export these extra products. The international market can help China increase consumption， but with China’s increasing proportion of exports， there may be many more conflicts from international trade.

Widen the income gap

Second， the investment-driven model will widen the income gap over time. In this growth model， individual people do not fully benefit as much as the country. In 2010， the government financial income grew 21.3%， while the income of urban residents and rural residents grew 10.1% and 12.9% respectively (National Bureau of Statistics of China 2011). In the investment-driven economy， the more capital you have， the more income you earn. If a country’s growth model cannot benefit the common people， this model cannot be sustained in the long run.

Waste energy and pollute the environment

Third， maintaining the investment-driven model will waste more energy and severely pollute the environment. The nationwide emission of sulfur dioxide in 2010 was 21.85 million tons. The total amount of money spent on cleaning up environment pollution in 2010 was 665.42 billion RMB， accounting for 1.66% of GDP. From the above statistics， it is apparent that this extensive growth model has left many environment problems. When we gradually change the growth model and place more importance on consumption， people will need more services， and this in turn will generate more jobs in service sector.

How to rebalance

In order to continue steady economic growth in the future， China wants to rebalance its economy and turn the economy from the investment-driven to consumption-driven. In my opinion， if China wants to increase its level of consumption， the most important thing is to improve people’s disposable income. I would like to explain how to improve the average income from the government’s perspective.

First， we need to raise the income level of low-income earners， since their marginal propensity to consume is higher than middle-income earners or high-income earners. When low-income earners’ income improves， the average propensity to consume of the whole society will increase.

Second， the government should increase the expenditure on social welfare. In recent years， the Chinese people bear a heavy burden of expenses related to housing， education， and health care. Due to these high expenses， the rate of consumption is very low， and the rate of saving is very high. Only when the Chinese government builds a sound social welfare system will people feel safe and be willing to consume freely.

If China transitions successfully from an investment-driven model to a consumption-driven model， resources can be better used， the income disparity between the rich and poor can be decreased， and the environment can be better protected. By increasing the national level of consumption， China can expect continued economic growth in the future.

References:

[1] Michael Pettis， The Contentious Debate over China’s Economic Transition， Policy Outlook， 2001

[2] Nicholas R. Lardy， Sustaining China’s Economic Growth after the Global Crisis， 2011