By Yang Zhiyong
Many international organizations recently raised their forecast of China's economic growth. The World Bank, for example, increased their forecasts for 2017 and 2018 from 6.5 percent and 6.3 percent to 6.7 percent and 6.4 percent; the Organization for Economic Co-operation and Development (OECD) raised the two figures to 6.8 and 6.6 percent; and the International Monetary Fund (IMF) raised them to 6.8 percent and 6.5 percent, respectively.
The adjustments made by these international organizations show their confidence in China's economic future. In the first half of this year, China's economy grew at a high speed of 6.9 percent. Many institutions estimate that this rate will be retained in the third quarter, and maintained or surpassed for the year overall. State media have projected that China’s economy will gain even stronger momentum after the 19th National Congress of the Communist Party of China (CPC).
China’s economic growth is on solid footing. As a mixed market economy, China’s economy is dominated by state-owned enterprises. At the end of 2016, the total assets of enterprises administered by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) reached 144.1 trillion yuan, rising 101.8 percent as compared with 2012. The taxes and fees they paid accounted for approximately one-third of the nation's total tax revenue. Their added value accounted for about one-seventh of the national GDP. In 2016, 83 state-owned enterprises appeared in the Fortune Global 500 list.
Enterprises are speeding up reform, and new driving forces for growth are emerging. Remarkable advances have been achieved in cutting costs. In August, the cost and expense on every 100-yuan main business of industrial enterprises with annual revenue from their main business operations of 20 million yuan was 92.74 yuan, down by 0.66 yuan year-on-year. Their leverage rate also saw a sharp decline. At the end of August, the debt-to-asset ratio of these enterprises was 55.7 percent, down by 0.7 percentage points yearly. In reducing overcapacity, SOEs directly administered by the central government, or central SOEs, met and surpassed their goal ahead of schedule in 2016 and in the first eight months this year.
SOEs have made significant headway in establishing a modern enterprise system. Presently, restructuring is underway in more than 92 percent of the subsidiaries of central SOEs and in more than 90 percent of enterprises administered by provincial SASAC. The organization of the board of directors has been standardized in most central SOEs. Pilot reforms have also been launched in selected SOEs to establish mixed ownership, which greatly enhanced the market’s role in allocating resources.
Innovation has provided enterprises with growing power. Large investments have been earmarked in research and development. Over the past five years, central SOEs invested 1.7 trillion yuan, or one-fourth of the national total, in sci-tech development, and won 424 national awards, accounting for one third of the national total.
The competitiveness of China's economy has been strengthened. Multiple scientific and technological breakthroughs were made at the most advanced levels. China has developed world-class technologies in areas such as manned spaceflight, submersible deep-sea exploration, high-speed railways, ultra-high-voltage (UHV) electricity transmission, mobile communication, and domestically manufactured aircraft carriers and large passenger aircraft. SOEs have also achieved positive results when fulfilling their social responsibilities. They have played an active part in China's poverty eradication campaign and provided aid to 246 poor counties, helping even more people benefit from China's reform and opening up.
These facts indicate that China’s economic growth is on solid ground, and give the nation reason to believe that the future will be even brighter.
The writer is a research fellow at the National Academy of Economic Strategy, Chinese Academy of Social Sciences.
The article was written in Chinese and translated by Chen Xia.