On 14 June Swedish Entrepreneurship Forum and Swedish Agency for Growth Policy Analysis co-hosted a seminar on the Chinese economic reform agenda. Professor Mao Yushi, founder of the independent Unirule Institue of Economics held a keynote on the theme “Basic Feature of Chinese Economy“.
Mao Yushi gave a broad overview of the economic development in China in recent decades. He noted that the proportion of the population living in poverty have declined from 65 percent in 1990 to 13 percent in 2012. Despite this, Mao predicts major challenges for the Chinese economy in the future.
– There are too many state-owned companies, and they are excessively and increasingly powerful.
According to Mao, the household consumption is currently too low, while banks have a lot of nonperforming loans. These two factors combined will lead to an economic crisis, Mao said. He suggested a number of reforms to strengthen the Chinese economy.
– Taxes should be reduced; energy prices do not reflect environmental costs and should be raised.
He argued that the interest rate should be allowed to follow the market and that overproduction in the economy is a threat which – together with corruption – should be eliminated.