Policies for Sound and Effective Investment in China
Since the start of the economic reform process in the 70s China has been able to generate
a large volume of investment, both from domestic and foreign sources. This high volume
of investment was instrumental in sustaining strong economic growth and related improvements
in living standards. However, this growth model is not longer sustainable. Returns
on investment have fallen, excessive capacity is plaguing several sectors and the
negative externalities have been very onerous, notably in terms of environmental degradation
and rising income inequality. A key objective of the Chinese government is therefore
to move the economy towards a more balanced, sustainable and inclusive growth path
as envisaged by the 13th Five-Year Plan. In this adjustment process, the country is
seeking new approaches for smarter, greener and more productive investment. This will
require mutually reinforcing reforms to improve investment planning, rebalance the
role of government and market forces, mainstream responsible business conduct and
encourage greater private investment, especially in green infrastructure. China’s
growing role as an outward investor may act as catalyser for the required reforms
at home, as Chinese private and state-owned enterprises have to adopt internationally
recognised practices and standards .
Published on March 19, 2016Also available in: Chinese
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