Eco­nomic re­struc­tur­ing a model for the world

China Daily (Canada) - - SHANGHAI - By XIN ZHIMING

Since the global fi­nan­cial cri­sis broke out eight years ago China has contributed greatly to and played a dom­i­nant role in main­tain­ing global growth, start­ing with its $586 bil­lion pack­age to stim­u­late the do­mes­tic econ­omy in Novem­ber 2008. Al­though China’s con­tri­bu­tion to global growth has de­creased to about 30 per­cent now, based on var­i­ous es­ti­mates, an­a­lysts say that af­ter re­struc­tur­ing its econ­omy, it will re­sume its ma­jor role in the glob­ale­con­omy inthemid­dle and long term.

China’s year-on-year GDP growth dipped to 6.9 per­cent in 2015, the slow­est in 25 years. In the first half of this year, it was 6.7 per­cent and the In­ter­na­tional Mon­e­tary Fund has fore­cast that in 2017, its eco­nomic growth could fur­ther drop to 6.2 per­cent.

While the global eco­nomic down­turn is be­hind China’s eco­nomic slow­down, the coun­try’s ef­forts to re­bal­ance its eco­nomic struc­ture to make it more de­pen­dent on con­sump­tion, ser­vices and high-tech in­dus­tries and less re­lianton­re­source­sanden­er­gyin­dus­tries have also af­fected its growth mo­men­tum, say an­a­lysts.

China’s eco­nomic re­struc­tur­ing may take years, but ini­tial signs of con­struc­tive changes are ev­i­dent. For ex­am­ple, in the first half of this year, China’s ser­vice in­dus­try ac­counted for 54.1 per­cent of it­sGDP­growth, up 1.8 per­cent­age points yearonAnd con­sump­tion ac­counted for 73.4 per­cent of GDP growth, up 13.2 per­cent­age points year-on-year.

The out­puts of crude steel and coal have de­creased in the first half of this year as China presses ahead with the drive to re­duce over­ca­pac­ity. More­over, the value added of the strate­gic new in­dus­tries in­creased 11.8 per­cent yea­ronin the sec­ond quar­ter of this year, up 1.8 per­cent­age points from the first quar­ter. New in­dus­tries, such as on­line ser­vices, on­line ed­u­ca­tion and med­i­cal ser­vices all reg­is­tered faster growth than tra­di­tional sec­tors, in­di­cat­ing China has made solid headway in eco­nomic re­struc­tur­ing, an­a­lysts say.

As China grad­u­ally re­struc­tures its econ­omy, it will hope­fully main­tain mid- to high­rate growth, which is good news for both China and the world, says Wang Xiangyu, a re­searcher at the In­sti­tute of Quan­ti­ta­tive and Tech­ni­cal Eco­nomics of the Chi­nese Academy of So­cial Sciences. Con­sid­er­ing that most de­vel­oped economies re­main trapped in weak growth, China’s high-qual­ity growth will serve as a sus­tain­able en­gine for global growth, he says.

“I’m quite con­fi­dent China will ac­com­plish its re­struc­tur­ing agenda since it has be­come quite re­silient now,” Wang says.

In the wake of the on­set of the global fi­nan­cial cri­sis that broke out in 2008, the world has been look­ing for the right path for eco­nomic de­vel­op­ment and seek­ing to ac­com­plish eco­nomic re­bal­anc­ing. The world econ­omy’s low growth has also led to po­lit­i­cal and re­gional in­sta­bil­ity, Wang says. If China suc­cess­fully re­struc­tures its econ­omy and finds new growth en­gines, then it will not only add to global growth, but also pro­vide a “China model” for other coun­tries as a ref­er­ence for their eco­nomic growth, he adds.

Based on the cur­rent progress, China could ac­com­plish re­struc­tur­ing by 2020, ex­perts say.

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