3. Economic Gene Mapping of China

China’s economy bids farewell to the period of high growth near 10 % in the past three decades. What will it be in the future? How do we avoid risk of stagflation and convert the challenges to opportunities of economic development by the fiscal and monetary policies? It will be tried in this chapter by studying the economic gene mapping of China. Simulations of economic development until 2025 have been executed with our multi-Agent Response Equilibrium (ARE) model which will be introduced in Part Two in this book. Policy selection is like doing experiments to test many policy simulations by ARE and then to find a better one. It has tested many scenarios of combining fiscal and monetary policies each year during 2015–2025. Two different policy simulations have been studied in this chapter: one is based on the fiscal and monetary policies in 2014 without any new policy during 2015–2025 as BAU scenario, and another one is to select some fiscal and monetary policies in 2015–2016 as policy scenario. Two economic gene mappings have been studied based on the two simulations. One finding is that the BAU would increase marginal representative factor productivity of the economy a little higher than policy scenario. Another finding is that a mutation occurred in primary industry, secondary industry, and national economy in 2012, respectively, a mutation in tertiary industry happened in 2014, and there would be no mutations in the three industries and national economy until 2025. The third finding is marginal representative factor productivity in primary industry would have a great increase during 2012–2025 based on the gene map, and perhaps it could be a productivity revolution. The fourth finding is there would be an economic cycle in China’s economy in 2015–2025, the peak growth would be around 2019–2021, and the low growth periods would be in 2015–2017 and 2023–2025. Policy scenario would decline the peak growth and rise lower growth of the economy. As for the inherent rule of the economy in China, there would be an increment of the productivity in the next few years if there were no economic events and strategic mistakes on national economy. Therefore, the mutation of national economy in 2012 would be an era to turn up productivity from lower level to higher one. In this case, the challenges could be an opportunity in China’s economic development.