China must adjust policy for new growth
From the perspective of a long-term economic cycle, China's economy is currently at the stage of gaining momentum. Meanwhile, the problem of structural imbalances is becoming apparent.
The economic long waves theory holds that in an industrial society, every round of technological innovation heralds a long period of robust economic growth. Within the long wave time frame, which can be subdivided into rising and declining periods, the economy alternately accelerates or slows down.
The general waves have historically lasted for 50 to 60 years in the first rank of industrial nations. Lately, as developing countries have adopted overtaking strategies to accelerate their development, they have introduced many advanced and mature technologies, which have shortened these cycles.
Domestic scholars hold that, starting in 1980, China entered the fourth long wave cycle since the 1880s.
Since that year, China has witnessed prosperous economic growth in the wake of its adoption of the reform and opening up policies.
Until the early 1990s, the Chinese economy had the characteristics of the rising part of the long wave period: It witnessed a high economic growth rate, continual price hikes and handsome corporate profits; new firms kept emerging and the unemployment rate was low, while credit grew rapidly.
From then until 2002, things have changed. Overcapacity has been a headache for many industries, which suffered from weak domestic demand.
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