Real estate sprees imbalance a growing economy
- Source: Global Times
- [22:12 February 07 2010]
- Comments
The latest figures from the National Bureau of Statistics show that investment contributed 8 percent of the country's GDP growth in 2009, while consumption accounted for only 4.6 percent and exports negative 3.9 percent.
China's economy depends heavily on investment and exports, but most investments are backed by government projects while exports are easily affected by the global economic environment as the majority of China's exports are labor-intensive and low-tech products.
The competitiveness of a nation's products hinges on its R&D ability, which is partly determined by a country's R&D spending.
In 2008, China's spending on R&D, science and technology totaled 461.6 billion yuan ($67.57 billion), an increase of 24.4 percent year-on-year, the NBS figures showed.
Although the R&D expenditure has seen year-on-year increase in the past few years, it accounted for only 1.54 percent of GDP in 2008, far below the 2.79 percent in the United States in the same year.
US expenditures on R&D totaled about $397.6 billion ($58.21 billion) in 2008, according to US National Science Foundation.
US President Barack Obama last year said his administration would devote more than 3 percent of its GDP to R&D.
In the US, the government has a sound legal system and a series of favorable policies protecting intellectual property rights and funding start-ups.
In the West, most R&D funds are private-owned, but in China, most of the R&D investment comes from the government, State-owned enterprises and universities.
The government should launch favorable investment policies and broaden individuals' investment channels. This would guide capital to invest in innovation-oriented businesses and weak sectors, helping balance the domestic economic structure.
Meanwhile, it is necessary to use tough measures, such as raising mortgage rate and down payment for second- and third-home buyers, to stop speculation and cool down the real estate sector.
A sound property market is both necessary to people's livelihoods and an essential part of a balanced economy.
The author is a Beijing-based freelancer. globaltimesopion@ yahoo.com
