On Tuesday, April 25, 2006, Professor Zheng Jing-hai from Department of Economics Göteborg University in Sweden gave a lecture on Can China’s Growth be Sustained? From A Productivity Prospective. Professor Zhang Jun, Associate Professor Chen Zhao, Doctor Chen Shi-yi and some students took part in this lecture.
In the first part Pro. Zheng introduced the change in growth pattern in China in recent years which was regarded as being of the “extensive” type. That means the growth is gained mainly through the expansion of inputs. As a result, the growth of productivity slows down. Also Pro. Zheng used a lot of statistic data to support this point. For example, TFP index for Chinese agriculture, 1952-1989 (Wen, 1993), China's TFP growth, 1978-1998 (Zhang, 2002), Annual Rates of Growth of Aggregate Industrial TFP (Jefferson, 2000) and so on.
Then Pro. Zheng introduced the capital formation. He regarded it as a vicious circle. High investment rate has built up excess capacity, caused deflationary pressure, cut profit margin, and created ever increasing bad loans in the banking sector. The turn to export market for the absorption of that excess capacity and resulted in the large buildup of foreign reserves and a rapid increase in money supply. As a result, the cheap money in turn fueled another round of reckless lending and investment, generating more excess capacity. He also said the Chinese economy suffers from a whole range of efficiency problems. Human capital, land, and other resources are under-employed, misallocated among economic sectors, and inefficiently used.
At last Pro. Zheng introduced the lessons that we can learn from the above description and he also give some policy options such as reduce saving and encourage consumption, Construction of the “Socialist New Countryside”, Financial sector reform and so on.
After the presentation, Pro. Zheng discussed with teachers and students present so as to the points that they had interest in.
