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China's Economy Remains Steady and Healthy Growth

Submit Time:25-09-2017 | Zoom In | Zoom Out

Author:Xu Kangning | Source:People's Daily (August 28, 2017)

Abstract:

Since China changed gears of economic growth in 2013, some scholars and institutions have predicted that China's economic growth will continue to decline to 5% or less. A few Western research institutions and scholars even argued that China is heading for a possible economic crash. But the fact is that since the first quarter of 2015, China's economy has achieved a growth rate of 7% or nearly 7% for 10 quarters in a row, representing a stabilizing trend featuring more sustainable and moderate medium- and high-speed growth. Recently, the International Monetary Fund (IMF) repeatedly raised the forecast of China's economic growth, reflecting the world's confidence in the Chinese economy. In the context of weak world economic recovery, the Chinese economy can maintain steady and healthy growth mainly because of the following three reasons. 

The economic structure was optimized, significantly enhancing the sustainability of economic growth. In recent years, China has taken the initiative to speed up the pace of industrial transformation and upgrading and constantly optimize the economic structure, in order to better adapt to and lead the new normal for economic development. In terms of the demand structure, consumption has become the primary driver that stimulates economic growth, and final consumption contributed 63.4% to economic growth in the first half of 2017. In terms of the industrial structure, the service industry has dominated around half of the national economy, and contributed 54.1% to GDP in the first half of 2017. In terms of the regional structure, the central and western regions had strong momentum for economic growth, and the eastern, central and western regions heading in a direction of more balanced and more coordinated development. In terms of the urban and rural structure, the urbanization rate of permanent population reached 57.4% at the end of 2016. The above data fully show that China's economic development model and economic structure are undergoing unprecedentedly important changes, and the quality and sustainability of economic growth are improving steadily. 

Innovation-driven growth was strengthened, accelerating the formation of new economic growth points. In the context of new normal for economic development, China has seized opportunities brought about by the global new round of technological revolution and industrial transformation, deepened the implementation of the innovation-driven development strategy, and promoted the upgrading of traditional drivers and the growth of new drivers, resulting in more active technological innovation activities, higher technological levels, and transition from factor-driven economic development to innovation-driven economic development. For example, with the extensive use of high-speed rail technologies, China's high-speed rail operating mileage reached 22,000 km at the end of 2016, exceeding the total high-speed rail mileage in the rest of the world; an array of the world's leading technologies have been applied in economic construction, as evidenced by the fact that "Internet Plus" economy is flourishing unprecedentedly, and new industries and new forms of business are emerging, accelerating the formation of new economic growth points. 

The supply-side structural reform was deepened, sparking the potential of economic development. Over the past period of time, China relied on the expansion of investment to drive economic growth. However, as China's consumption structure is being upgraded and consumer demands are shifting to diversified, high-end and service-oriented demands, the mismatch between supply and demand occurs, as evidenced by overcapacity, too much inefficient supply, and insufficient effective supply. In this case, the continuous expansion of investment would significantly weaken the role of investment in driving economic growth and even exacerbate existing contradictions and problems. Therefore, in recent years, China has shifted its focus of macro-economic management to the supply side while moderately expanding aggregate demand, and has propelled the supply-side structural reform, in order to improve the quality and efficiency of the supply system, accelerate the development of new drivers, transform and upgrade traditional industries, and enhance the momentum for sustainable economic growth. With the deepening of the supply-side structural reform, the value added of products has risen greatly and the endogenous driving force of economic development has been growing, without a sharp increase in the total amount of social products. 

As an economic power, China, thanks to its complete economic structure and a comprehensive range of industries, has excellent industrial supporting capacities no other country can compare with, and it is resilient in economy and able to resist risks. According to the main tasks and contradictions faced by different stages of development, China can adjust its macroeconomic policies and constantly improve the socialist market economic system, thus enhancing the lasting momentum and vitality of economic development. China, in line with the general trend of in-depth economic globalization, unswervingly opens wider to the outside world, and actively participates in the international division of labor, in an effort to achieve win-win cooperation with other countries. As a result, the fundamentals that support sound long-term economic development in China have not changed and the Chinese economy will remain stable and healthy growth. 

(Author: Vice Chairman of China Society of World Economics, Professor of the School of Economics & Management, Southeast University)


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