23 June 2014
Asia’s Growth Bottleneck: Ending the Impasse
|Professor Hua Min, Director of Fudan University’s Institute of World Economy|
Why has an Asian economy never sustained growth for more than 50 years? Can China overcome the pitfalls of the middle-income trap to stay on a healthy growth track?
Professor Hua Min, Director of Fudan University’s Institute of World Economy, believes he has the answers. Speaking at the 2014 Shanghai Forum, he emphasised the importance of change and the need to make good on the reform measures outlined by the Xi Government at the Third Plenum.
As part of his presentation, the Professor identified three factors that have characterized economic growth across Asia.
1. The region’s economic growth has been spurred by a desire/need to catch up with the developed economies. As part of this catch-up process, governments have played a dominant role, prioritising GDP, while failing to establish an economic system conducive to wealth creation needed for sustained growth.
2. Growth in the region has been mainly exogenous - reliant on external stimuli, demand and resources. This has seen growth led by exports, while R&D expertise and natural resources have frequently been imported.
3. Many of the economies in the region, given their comparable advantages and resources, have developed along similar lines. This sees many of them now competing with one another in terms of production facilities and exports. This has made it difficult to promote any Pan-Asian economic cooperation or alliance.
For Hua, reform is the key to sustainable economic growth and development in Asia. In particular, he believes there is a need to establish a genuine market economy, one largely free from government intervention in terms of resource allocation. He also advocates the liberalisation of trade and investment regimes and the cessation of subsidies to uncompetitive sectors.
Overall, he believes that China’s greatest challenge is to sustain growth and clear its current developmental bottleneck. With that in mind, he is adamant that the reform measures outlined at the Third Plenum need to be fully implemented and maintained.