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(Yicai Global) Dec. 14 – Morgan Stanley remains optimistic about China's long-term development though changes in the international environment have brought challenges to the country's economic development, the American multinational investment bank has said.
Earlier policies released by the Chinese government will gradually take effect around the second quarter next year and help economic growth to rebound, according to Morgan Stanley's chief China economist Xing Zhiqiang.
China's economic growth next year will decline slightly to 6.3 percent from this year's 6.6 percent, and the slower growth will mostly occur in the first quarter but it is expected to rebound in the second quarter, Xing and his colleagues predicted in a recent interview with Yicai Global.
It is highly unlikely to replace China considering its infrastructure, human resources capital and research and development ability, Xing said, adding that it is also quite difficult to transfer industrial chains out of China. Despite changes in the international environment being a challenge to China Morgan Stanley remains optimistic about the country's long-term development, he added.
Though China's population is aging and labor costs are rising, there still is an abundance of labor, especially those with higher education, Xing stated, revealing that the Chinese mainland has had 34 million new college graduates in the past five years. "Skilled labor and labor capable of R&D are easier to find on the mainland," he insisted.
R&D expenditure on the Chinese mainland has increased significantly to nearly USD270 billion per year in recent years, second only to the United States, and China has also applied for an increasing number of international patents and became the world's second largest economy for patent applications last year, said Xing. "China's R&D ability is improving, and many multinational firms have opened R&D (centers) in China which will be difficult to transfer to other countries," he added.
Many Southeast Asian countries still lag behind China in infrastructure construction, and China's achievements in high-speed train and rail transport construction in recent years has further widened the gap from its potential competitors, Xing said.