By Zhang Laiming, vice-minister of the Development Research Center of the State Council (DRC), and Li Jianwei, Research Department of Social Development, the DRC

Research Report No 28, 2014

Abstract:

There are problems that cause decreasing investment intention in the real economy, such as the weakening domestic demand, declining overseas demand, rising production cost, high tax, and a low income from investment.

The real estate bubble has consumed a great deal of resources, which push up finance and production costs and weaken household consumption and enterprise competitiveness.

Many business people would rather speculate than do real business but, since real business is the foundation of the economy, the country needs a management mechanism to stop the economic bubble for sustainable, healthy economic development.

China also needs to reform its income distribution, develop a newer more open economy, continue its reforms in finance and taxation, improve the real economy's sustainable development, and attract more business people in the real economy.