Wang Guoqing, spokesperson for China’s top political advisory body, said Wednesday that China’s economic growth still stands out from that of other countries despite a slowdown last year, and the country’s economic fundamentals remain sound. The viewpoint echoed Premier Li Keqiang’s comments that the Chinese economy is still on an upward trend despite superficial fluctuations, and that China has great potential for long-term growth and ample leeway to deal with short-term economic issues.
Some people have doubts about such positive comments on the Chinese economy, citing issues such as an excessive debt burden, difficulties in curbing overcapacity and potential unemployment risks. Critics also focus on local governments’ overreliance on revenue from land sales and China’s aging population, which could hamper the government’s efforts to deal with the pension gap.
However, these views lack common sense, and sound like the bearish opinions being spread by some people to discredit the Chinese economy.
People should not overlook the bright points in the economy, including China’s high personal savings rate, a low ratio of central and local government debt to GDP, massive foreign currency reserves, the country’s huge consumption potential, rising trade opportunities between China and its neighboring countries, and the Chinese characteristic of being industrious. People might fall into the trap of thinking that it will be too difficult to solve the problems faced by the Chinese economy if they overlook the bright points.
Retaining a positive outlook for the Chinese economy does not mean being an advocate for blind optimism. Close attention must be paid to the challenges faced by the economy and solutions must be found. But it is necessary to have a balanced view of both the difficulties and bright points in the economy, rather than focusing only on bearish views.
I don’t think it’s surprising that China is experiencing a slight slowdown in growth. The country is entering a crucial period in its economic restructuring after seeing rapid economic growth for decades. It is natural and normal to see a traveler slow down and take some rest after a long journey, and to reflect on experiences accumulated in the past. The Chinese economy now has greater capacity to deal with risks, thanks to the economic reforms that have taken place over the past 37 years since the beginning of the country’s opening-up.
The major reasons behind the slowdown in Chinese economic growth are falling exports, low production efficiency in traditional industries and the fact that the marginal utility of investment is diminishing. Since 2013, China has started making all-around strategic adjustments. It launched the “One Belt, One Road” initiative to explore more diversified international trade, and also adjusted its strategy for cooperating with its major trade partners such as the US and Europe and expanded overseas investment. Meanwhile, the country is also seeking to boost private investment by promoting mass entrepreneurship and innovation.
So far, a lot of sectors including high-end equipment manufacturing, information technology-based industries and tourism have become new growth points and achieved remarkable success. In 2016, a range of reforms – including mixed-ownership reform, registered residence reform, land reform and pricing reform – will continue to make progress.
As the reform dividend continues to unfold, China’s economy can maintain growth of above 6.5 percent in 2016 and during the rest of the 13th Five-Year Plan period (2016-20), and China can still be a key engine of the global economy.
The author is deputy managing editor of Securities Daily. firstname.lastname@example.org