China's Economic Growth Retardation Assay

Part 1. Aim and Train of Thoughts The aim of this paper is, through obstruction analysis of China's economic growth, to reveal the cause for the continuous low growth rates of China's economy and to put forward policy suggestions for higher growth rate. Since 1994, both the internal conditions and external circumstances have experienced great changes, such as the changeover of the relationship between demand and supply, yearly declining economic growth rate, increase in the number of laid-off employees, price index dropping, etc. Regarding these phenomena, various explanations and comments have come from the academic circle, therefore, different opinions of guidance to policy of macro-economic and policy of refonn have been offered. Through research, this paper gives an economic growth obstruction analysis method, which holds that the economic growth rate is determined by the interaction of motive factors and obstructive factors. Obstruction represents restraint to growth. Of various obstructions, the one that presents maximum restraint to aggregate growth is referred to as fundamental obstruction; whereas the cause that forms this fundamental obstruction by mechanism is referred to as core obstruction. The core obstruction brings about the limitation to economic growth rate (or possibility boundary). With the change in the content and degree of fundamental obstruction and core obstruction, the limitation to economic growth rate will change accordingly. When the restraint degree of core obstruction increases, the economic growth rate will decrease. To the contrary, a breakthrough of core obstruction can reduce the degree of obstruction and bring about transform of core obstruction. Through adoption of appropriate government policy, the restraint of core obstruction can be reduced or even broken through and the motive power can be released to bring about speed up of economic growth. Using the above-mentioned approach, this paper has systematically analyzed demand, supply, and transaction that influence economic growth. And, through a systematic, from surface to depth, and from aggregate to mechanism carding of the following factors: l.consuznption, income and employment; 2.investment resource utility, resource allocation efficiency and investment macro foundation; 3.huznan capital, education industrialization, This paper has presented an overall view of the motive factors and obstructive factors that From historical analysis to structural and mechanical analysis, the paper analyzes systematically, from the three angles of demand, supply and exchange of supply & demand, the function and mechanism of various factors of economic growth. The relation between demand and economic growth is researched in this part of the paper. First, unfolding the plane structure of the final consumption, researches are made on domestic and overseas consumption, residential and governmental consumption and city and countryside consumption and comparisons between the contribution of final consumption to economic growth and the contribution of final consumption & investment demand to economic growth. Secondly, the paper researches the relation between employment, income and deposit. And the conclusion is that demand has become the basic obstruction to economic growth. 4. Supply and economic growth The excessive rigid supply and inadequate effective supply produce obstructive effect on economic growth.