China inches to­ward growth-pace bal­ance

China Daily (Latin America Weekly) - - Business -

BEI­JING -- China is de­ter­mined to put growth qual­ity be­fore pace, but that will not hold the econ­omy back from grow­ing faster than most of other coun­tries in the com­ing decade, ac­cord­ing to ex­perts.

In a re­port de­liv­ered to the 19th Na­tional Congress of the Com­mu­nist Party of China or CPC, the coun­try’s lead­er­ship called it “a new his­toric junc­ture in China’s devel­op­ment”, as the econ­omy has been tran­si­tion­ing from a phase of rapid growth to a stage of high­qual­ity devel­op­ment.

In the eyes of Chi Fulin, head of the China In­sti­tute for Re­form and Devel­op­ment, that does not mean the growth rate will be mediocre.

Over the next five to 10 years, China’s econ­omy will be able to achieve at least 6 per­cent of an­nual growth, thanks to im­prove­ment in in­dus­trial struc­ture, up­grad­ing of consumer spend­ing and progress of ur­ban­iza­tion, he said.

In the past five years, the global econ­omy ex­panded at an av­er­age rate of 2.6 per­cent, while de­vel­op­ing economies grew at 4 per­cent.

China has set 2020 as the tar­get to fin­ish build­ing a mod­er­ately pros­per­ous so­ci­ety in all re­spects, just one year be­fore the CPC cel­e­brates its 100th an­niver­sary.

Chi es­ti­mated that by the end of 2020, China’s eco­nomic re­bal­anc­ing will yield eyeIn prop­ping re­sults.

By then, the value of the coun­try’s ser­vices sec­tor will in­crease to about 50 tril­lion yuan ($7.58 tril­lion) from 38.4 tril­lion yuan recorded in 2016.

Re­tail sales of consumer goods will also ex­pand to about 50 tril­lion yuan from 33 tril­lion yuan recorded in 2016.

The integrated devel­op­ment of ur­ban and ru­ral ar­eas is ex­pected to gen­er­ate in­vest­ment and con­sump­tion of nearly 100 tril­lion yuan, which will be the most re­mark­able bonus for China’s devel­op­ment in the medium to long run, he said.

Over this pe­riod, China’s con­tri­bu­tion to global eco­nomic growth would re­main at around 30 per­cent. More than half of its pop­u­la­tion would be­come middle-in­come earn­ers.

“A suc­cess­ful re­bal­anc­ing of the world’s sec­ond largest econ­omy would not only up­grade China’s econ­omy, but also boost global eco­nomic re­cov­ery and growth,” Chi said.

the fu­ture, China’s eco­nomic re­struc­tur­ing will be ad­vanced to­gether with open­ing-up, of which the Belt and Road Ini­tia­tive and the devel­op­ment of trade in ser­vices and free trade zones will be focus ar­eas, he said.

The In­ter­na­tional Mon­e­tary Fund re­cently raised its fore­cast for China’s eco­nomic growth in 2017 and 2018 to 6.8 per­cent and 6.5 per­cent re­spec­tively, both higher than the ear­lier fore­cast in July.

For an econ­omy with a to­tal vol­ume of over $11 tril­lion, main­tain­ing such high growth is not easy, Chi­nese Vice Fi­nance Min­is­ter Zhu Guangyao said.

China’s sta­ble eco­nomic growth mainly stems from ma­jor progress in eco­nomic re­forms, par­tic­u­larly sup­ply­side struc­tural mea­sures (such as cut­ting over­ca­pac­ity in key sec­tors like steel and coal), and the gov­ern­ment’s abil­ity to main­tain a sta­ble macroe­co­nomic pol­icy, he said.

While gains from struc­tural re­forms will come with a time lag, they will have a pos­i­tive im­pact on China’s eco­nomic growth in the medium term, said Changy­ong Rhee, di­rec­tor of the Asia Pa­cific Department at the IMF, adding China’s growth has also pro­vided am­ple op­por­tu­ni­ties for Asia to main­tain its growth over the last 10 years.

ZHANG KAIHU / FOR CHINA DAILY

A worker per­forms qual­ity checks dur­ing a week­end shift at a wheel man­u­fac­tur­ing plant in Dong­hai, Jiangsu prov­ince, in Oc­to­ber.

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