전환기 중국경제의 진단과 전망

Diagnosis and Prospects of the Chinese Economy at a Crossroad

Chinese economy has entered a declining period of its business cycle in 2008,after enjoying six year long high-growth period in 2002-2007. This change has occurred for several reasons interacting each other. First, the retrenchment policy which was implemented to cool down the overheated economy in late 2007 through early 2008 began to take its effect. Second, the restructuring policy targeting labor intensive sectors engaging in processing trade and some heavy industries plagued by over-capacity began to show its effect, too. Third, the beginning of unexpected global recession originated from the financial crisis of the US exerted its influence on Chinese economy. The fact that the current downturn of Chinese economy is due to complex factors implies that it will not be easily reversed. It suggests that Chinese economy is facing a crisis, mainly because the sudden drop in its growth rate will lead to substantial increase in de facto unemployment. It could cause social instability, which further could threaten the political stability. Consequently, Chinese government began to introduce stimulus policy package to prevent hard landing of its economy. The expansionary monetary and fiscal policy combined with government intervention to increase infrastructure investment and domestic consumption may beable to prevent hard landing in the short run. However, it may hinder some of the structural shift of Chinese economy, which is essential for sustaining economic development in the long run. The key structural shifts include the following three elements; a shift from export-led growth to domestic demand-led growth, upgrading of industrial structure from low value-added industries toward higher value-added industries, and a shift from input-driven growth to efficiency-driven growth. The current crisis and the response of the Chinese government may work positively for the first element of the shift, while it would work negatively for the second and third element of the shift.