China Just Went Through a ‘Lost Decade’: Entrepreneurs
After Japan's "lost decade" and worries that Europe could suffer one too, you might be surprised to hear that some Chinese entrepreneurs are suggesting that China has just come out of its own "lost decade". Especially surprising given that China has been the world's fastest growing economy since 2001, excluding countries with populations under 10 million.
But at a summit in Kunming in the South-western Chinese province of Yunnan, several entrepreneurs told CNBC growth had been tampered by government control, which had hindered the progress and development of private enterprise. The entrepreneurs attending the China Entrepreneur Club's Annual Summit of Green Companies oversee a collective revenue of$300 billion in 2011.
With the end of Hu Jintao's ten-year presidency and the beginning of Xi Jinping's tenure, Chinese entrepreneurs feel they can finally reveal the depth of the problems they faced during the 2000s.
Huang Nubo, the founder of Beijing Zhongkun Investment Group, said: "Now that there's a new government in place I can finally say that the last ten years have been very bad for the economy."
"We've lost a lot of valuable resources, and also we've lost a lot of the momentum that we had. Before, we had open markets and entrepreneurship and that's what helped China succeed. We have to go back to market forces as well as fight corruption."
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While China's annual Gross Domestic Product (GDP) was consistently above 8 percent through the 2000s, with a high of 14.2 percent in 2007, the economy has begun to slow recently. GDP in the fourth quarter of 2012 was just 7.9 percent, a 13-year low. Figures for the first quarter of 2013 showed further slowing, with growth of 7.7 percent.
Many Chinese entrepreneurs feel the country can recover from its "lost decade" with the new government. Michael Yu, the CEO of New Oriental Education and Tech Group, agreed with Huang that the government had too much control over the country's resources.
"The state owns the businesses and they occupy a lot of the resources that should be occupied by private businesses," Yu said. "This is a trend in China."
"But I am pretty sure our new leaders understand this, so I have full confidence that for the next decade most of the resources will come back to private businesses."
Yu believes that the growth of the internet and mobile market will make private business flourish in China. "Because of the development of the internet and mobile business, most of the resources can come directly; not through the government, but directly to private businesses. So I'm pretty sure that for the next ten years, Chinese private business will develop even faster than the last ten years."
Liu Chuanzhi, the founder and honorary chairman of Lenovo, the world's second-largest PC vendor, said the new regime under Xi needed to push through a lot of reforms to aid private business.
"My view is that the Chinese government should adopt a more systematic and comprehensive approach when it comes to reform," Liu said. "For example, how to establish a better rule of law in this country so as to increase the credit worthiness of the government, so that the public will have more confidence and ensure a culture of mutual trust and honesty can be established."
"That way the government can push through more social and political reforms that can be the basis of further economic reforms."