Development and Reform Commission: 7 trillion large projects approved

Professor Wei Jie of the School of Economics and Management of Tsinghua University and Professor of EMBA of Antai College of Economics and Management, Shanghai Jiaotong University said at the Shanghai Economic Forum hosted by the Antai College of Economics and Management of Shanghai Jiaotong University on September 23rd that from the beginning of May this year, the National Development and Reform Commission approved the investment of large projects. The amount is 7 trillion yuan. Wei Jie said that the NDRC has restarted the large-scale project establishment to avoid further economic downturn and quickly invested 7 trillion yuan in the short-term. If the proportion of investment in economic growth cannot be effectively solved, this round of investment is likely to reproduce 2009. - Overcapacity and inflation caused by the rapid increase in investment scale in 2010. "In the fourth quarter of 2008, domestic demand began to be launched. So far, China's so-called start-up of domestic demand is to start investment. The round of investment at the end of 2008 started very fast. By 2009, the contribution of investment to economic growth reached 67%. As a result, there was a serious overcapacity and inflationary pressure. "Wei Jie said, "In the fourth quarter of last year and the first quarter of this year, we quickly reduced the proportion of investment, and its contribution to economic growth was reduced to 17 %, which in turn led to a sharp drop in economic growth and heavy losses in heavy chemical industries (such as steel, cement and machinery). Wei Jie said that according to preliminary findings of a research topic he is currently doing, China is In the process of starting domestic demand, the contribution of investment to economic growth should not be lower than 20%, but at the same time it should not be higher than 30%. "In the range of 20%-30%, overcapacity, inflation and economic growth can be avoided. In the next ten years, Wei Jie believes that China’s economic growth will still depend on investment growth, and the contribution of the envisaged consumption to economic growth is difficult to improve. As do rely on consumer-driven economic growth in the United States model, it is not a realistic topic. At the same time, Wei Jie said that when China promotes economic growth by investment, it should change the legal status of the private economy and promote the private market to have a complete market competitive position. "If this problem is not solved, it is still hoped that it will only rely on the government. The investment method will be difficult to sustain and the effect will gradually decline."

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