Dividends from reform

Transparent and independent information disclosure system necessary to improve market and reduce 'equality debt'

With China's economic growth slowing, more "dividends of reform" are desperately needed to boost sustainable development and extend to everybody the benefits of national economic development.

As a kind of institutional change, China's transformation from a planned to market economy has contributed about 45 to 48 percent to its economic growth over more than 30 years, bigger than any other element. For example, China's institutional reforms over the past decades, involving the form of its production organization and factors of production, have promoted optimization of its resources distribution and raised its production efficiency. Reforms in the economic field and among different State departments have played a positive role in improving market rules and boosting economic development. Also, China's bid to integrate itself into the regional and global economic systems has helped it share in the benefits of economic globalization and trade integration. Reforms conducted in some non-economic fields and informal institutional reforms have also changed stereotyped ideas, values and codes of conduct among Chinese people and made such concepts as the market and efficiency take root in their minds.

The resources and demographic dividends that have bolstered China's fast-growing economy over the past decades are now on the wane and their dwindling has even become the bottleneck in its bid for sustainable economic development. China's gross domestic product accounted for 9.5 percent of the world's total GDP in 2010, but its energy consumption was tantamount to 2.25 billion tons of oil, 4 percent higher than the United States. China's steel, bronze, aluminum and cement consumption were also far more than 9.5 percent of world's total demands. Such an economic model based on heavy energy and resources consumption is beyond China's and also the world's capacity to bear.

China's demographic dividend started vanishing in 2010, as indicated by the sixth national census, which shows the country's working-age population will experience negative growth soon. The decreasing number of redundant laborers transferring from rural to urban areas and the emerging labor shortages in some cities also signal the approach of the Lewis turning point. The declining labor supply is becoming a drag on China's economic development.