China’s average annual economic growth could be at least 5.5 per cent in the next five years and consistently expand at 5 per cent through 2035, Huang Qifan, a former mayor of Chongqing, said in a speech on Tuesday.
Huang, who retired from his mayoral position in 2016 and is now a government researcher, made the comments in an online webinar during the Credit Suisse China Investment Conference, painting a rosy picture of the world’s second biggest economy under Beijing’s new “dual circulation” strategy.
China’s top leadership concluded a meeting on the 14th five-year plan last week and the nation’s top economic planning agency said afterwards Beijing might resume setting annual economic growth targets over the next five years after abandoning the practise in 2020.
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Huang said one goal of dual circulation, which aims to boost domestic demand and make China more economically independent, was to reduce dependence on overseas energy sources, particularly oil.
China wants to reduce the amount of crude oil it imports by 10 to 20 per cent, according to Huang. It now imports around 70 per cent of the oil it consumes today.
Huang said China should capitalise on its large reserves of shale gas.
“We should learn from the US in extracting shale gas,” he said. “Last year, China produced about 15 billion cubic metres of shale gas.
“If we could increase it by 10 times over the next decade, it would boost our energy self-reliance … and reduce the share of overseas energy supply to 50-60 per cent.”
Dual circulation, which was introduced by President Xi Jinping in May, requires changes in both supply and demand, and was in line with Beijing’s supply side reform push started in 2015, Huang said.
For instance, China’s steel industry has excess production capacity of about 200 million tonnes.
Apart from shutting down small-scale and polluting steelmakers, China should also expand domestic demand, including for steel beams and metal roofing, because more than 90 per cent of its steel production was raw steel material, he said.
During the webinar, Huang also said China had weak links in technology it needed to fix.
China’s research and development (R&D) spending has risen quickly to become one of the world’s highest. But the share of R&D spending on core hi-tech components, such as semiconductors, is only about 5 per cent, compared to 20 per cent among the Group of 20 countries.
No country in the world could be 100 per cent self-reliant on chip making. It’s not economical
Huang said it was unreasonable to think that China could be completely independent in semiconductor manufacturing.
“No country in the world could be 100 per cent self-reliant on chip making. It’s not economical,” he said.
China should continue to cooperate with the rest of the world, including major US semiconductor firms, despite a growing tech war between Washington and Beijing, Huang said.
“We need to work with European, Asian, and American high tech firms,” he said. “That is still an important direction. Cutting off collaboration because of current problems, and decoupling is unreasonable and can’t happen.”
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