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tivity. China’s goal is to increase the production of higher
added value products by investing in new technology and
R&D.
Industrial production also has its challenges. Improving
resource efficiency and decreasing plant emissions have
become top priorities.
“Demographic change will also require increased effi-
ciency in the future. An ageing population is as big a chal-
lenge in China as it is in Europe,” Malassu points out.
Other areas requiring investments include the construc-
tion of more efficient power plants and better transmission
networks.
China will continue to be dependent on coal-fuelled
energy in the future, but the country is also increasing
its production capacity of nuclear, wind, solar and hydro
power.
Concerns over incurring debt
According toMalassu, the liberalisation of the banking and
financial sector and the full convertibility of the yuan are
major challenges to the growth of the national economy.
So is China’s internal debt. As a result of its excellent
export income, the country has managed to collect unprec-
edented foreign exchange reserves, but local governments
have incurred debts to fund huge infrastructure projects.
As the economic situation in the building industry has
deteriorated, the income local governments receive from
selling building land has declined.
Many inefficient state-owned enterprises also have
heavy debts.
The debt of households has also increased as a result
of purchasing apartments, cars and consumer goods.
The rapid growth of property prices in growth centres
has long been one of the main concerns of the Chinese
Agriculture 34%
Industry 30%
Services 36%
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