Also the Chinese economy has been plagued by high savings and low consumption since 2000. Although consumption's proportion of GDP started rising from 2010, the decline of external demand boosted the development of the tertiary sector, the added-value of which surpassed that of the second industry. This trend will continue for a certain period of time. By 2020, China is expected to become an economy built on domestic demand and a major world market.
The historical experiences of some successful economies prove the ending of the peak of industrialization does not mean an economy will inevitably decline.
Japan's economy continued to grow at 7 percent for years after the 1970s when its industrial peak came to an end. And South Korea maintained an economic growth above 8 percent on average for a decade after its industrialization peaked in 1988.
Industrial products from the two countries started entering the world on a large scale, electronics and automobiles in particular, after they reached the peak of their industrialization.
The robust stable economic growth of Japan and South Korea comes from their solid manufacturing industrial base, and innovation. Enterprises in the two countries pay more attention to product quality and innovation than the quantity of their output.
China has established a sound industrial base. If it can effectively develop a strong innovation capacity and turn innovation into industrial output, China can also maintain its economic growth at a mid-high rate.
The financial crisis has forced Chinese enterprises to upgrade their technology and improve their management. In the next 10 to 20 years, China will become the main destination for the relocation of the electronic and auto industries from South Korea and Japan. The Internet industry and the combination of the Internet and traditional industries will become new growth points for China's economy.
China will carefully adjust its monetary policies this year according to its practical needs, maintain the stability of its macro-control policies, and make its investment more efficient. Among the targets will be those fields that are essential to restructuring the national economy. The housing market will also recover to a certain extent, catering to the increasingly diversified demands of Chinese consumers.
It is predicted that the United States' economic growth will hit 3 percent this year. Every 1 percentage point of US economic growth can pull the world economic growth by 0.2 percentage point. The US will remain the major consumer market in world economy this year. Given the close connections between China and the US, China will be able to benefit from the US' stable growth.
The author is director of the China Center for Economic Research and dean of the National School of Development, Peking University.
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