BEIJING, Jan 28 (Reuters) - China's economic growth in coming years could slip to 7 percent or less a year, burdened by the global financial crisis and domestic constraints, an adviser to the country's central bank wrote in a new academic paper.
But the adviser, Fan Gang, who holds the academic seat on the People's Bank of China's monetary policy committee, and his two co-authors also found that China's economy could grow at an average 9 percent annually until 2020 if it sheds growing government costs and lifts consumer spending.
Their findings were published in the January issue of the Chinese-language Economic Research Journal, in a paper that focuses on total factor productivity in the world's third biggest economy.
They concluded that China's biggest long-term growth worry is not external but domestic shackles on productivity.
"Although the current world economic crisis will have an unfavourable impact on China's economic growth in the coming period, it is not decisive," they wrote, citing the need to boost domestic consumption. "In fact the challenges confronting China's economic growth in the future are mainly domestic."
Gross domestic product growth slumped to 6.8 percent last quarter, compared with a year earlier, dragging down the pace of expansion for all of 2008 to a seven-year low of 9.0 percent.
But China's leaders have said they can achieve 8 percent growth this year, in spite of the grim global scene, by stimulating domestic consumption with an array of state spending initiatives.
Fan Gang and his co-authors, Wang Xiaolu and Liu Peng, suggest growth rates a little less than that unless the government surmounts those domestic burdens on productivity.
"The impact from the world financial crisis may be felt over several years into the future," they wrote, also noting that the efficiency gains from China's market reforms may diminish.
"These factors may bring average growth rates in the future period to 7 percent or less."
But they also found that China could grow by 9 percent or more a year from 2008 to 2020 if it pushes political reforms to cut growing government administrative costs and and stimulates domestic consumption by improving social welfare and education and spreading income more equally.
"If technological progress accelerates, a growth rate of close to 10 percent cannot be excluded."
Fan and Gang are both researchers with the China Reform Foundation, while Liu works in the Ministry of Commerce. (Reporting by Chris Buckley; Editing by Alan Wheatley)