The Chinese Academy of Social Sciences yesterday warned the mainland faced deflation, rising unemployment and bad debts if fast economic growth was not maintained.
The warning is contained in its autumn report prepared by a team of eight economists, led by Liu Guoguang and Wang Luolin.
'The level of domestic demand is inadequate, especially that of consumer demand. This problem has not been solved. There is a gap between the actual economic growth and its potential,' the report says.
'If our savings rate of more than 35 per cent cannot maintain a high level of growth, it will lead to many problems, including increasing unemployment, a mountain of bad debts and deflation. The way to solve these problems is to maintain a high level of economic growth.'
A key reason for the situation is that personal incomes are growing more slowly than GDP (gross domestic product), especially in rural areas. The low level of farm incomes is a major cause of weak consumption.
The report calls on local governments to help laid-off workers find new jobs, improve the social security network, implement minimum wage levels and protect the vulnerable through laws and improved management.
