1. Can China Smoothly and Successfully Shift to a Sustainable Growth Model Andong Zhu Tsinghua University

2. Outline Introduction The Growth Models in the past 30 yeas Opportunities and Challenges to New and Sustainable Model Conclusion

3. Introduction: From Old China to New China Semi-Feudal Semi-Colonial Backward Independent Economic & Social Construction Balanced Market-Oriented GDP Growth Fast Income Inequality Social Development Environment Sustainable (Economic, Social, Environment) Development 19491978 2002 or 2009?

4. A Family in the Old China

5. 1948: Hyper-inflation in China

6. The Achievements of New China before 1978 Preliminarily Industrialized the Economy Established a Independent and Comprehensive Industrial system GDP Growth Rate Averaged at 6.68% per year during 1953-1978 Life Expectancy increased from around 35 to about 67 years.

7. The Growth Models of New China 2.0 Achievements Evolvement of the Growth Models Problems

8. Fast GDP Growth

9. Huge Amount of Foreign Reserves

10. Evolvement of the Growth Models Planned Economy With Market Mechanism Balanced/Inward Looking Growth Marketization; Privatization Liberalization Over-dependent On International Market And Investment Sustainable (Economic, Social, Environment) Development Relatively Balanced/Outward Looking Growth Imbalanced/outward Looking New growth model? 1992200120091978

13. The Over-dependency on Investment

14. The Consumption Ratio in China

15. Sweden 25, India 32.5, United States 40.8, China 44.7, Brazil 59.1 Widening Income Inequality

17. What are the Major Reasons of Inequality in China Monopoly? Corruption? Privatization? Ownership Income distribution Ownership Labor Relation Income distribution

19. The Laid-off/privatization Movement(Mn) Urban employment State-owned Units Collective- owned Units highest level27331(2005)11261(1995)3628(1991) lowest level19040(1995)6488(2005)810(2005) change 8291-4773-2818

20. Informalizing Labor Market

21. What New Growth model Needed in the Chinese Economy? Balanced/sustainable Economic development Less depend on international Market Less depend on Investment Increasing Private Consumption increasing income of the poor & improving the Social Security Net (re-)nationalization of enterprises; more strictly regulate the market

22. Opportunities and Challenges to New Model Opportunities The Drain Up of the Rural Labor Reserves The Current Crisis (International Market; US Model; Theory, etc) Challenges

23. Low External Debt Risk

24. Enough Room for Fiscal and Monetary Policies At the end of 2007 total public debt was RMB3.4 Tr. as 13.8% of GDP and 67.0% of government revenue

25. The Composition of the 4 Tr. RMB Stimulus Plan

27. Conclusion The growth pattern of China has to be changed even without this current Crisis It will not be Easy to transform China to a really Sustainable Development Model Smoothly and Successfully

28. Comments and Questions Welcome! Thank You!