Restructuring tops local agenda
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E-mail China Daily, January 29, 2014
In recent days, the world must have been keeping a close eye on China as the world's second-largest economy posted a 7.7 percent gross domestic product growth figure for 2013, the slowest in 14 years.
Sophisticated analysts will pry into the government's restructuring of the economic growth model before assessing the likely level for this year.
Because Beijing is likely to maintain a moderate economic growth target this year, a rebalancing initiative will advance first from the central government, then outward to the provinces and other municipalities and regions.
"On the whole, China's economy grew steadily last year. The country is now at a crucial period of economic restructuring," said Ma Jiantang, head of the National Bureau of Statistics, on Jan 20.
"The momentum unleashed from the economic reforms and restructuring will be the major force supporting a steady economic growth throughout this year after the government forged a comprehensive reform blueprint late last year."
China's fast economic expansion in past decades made the nation the world's second-largest economy with the help of investment stimulus and booming exports. But sluggish international demand, and mounting government debt pressure at home, as well as the heavy smog that has blanketed the country all suggest an urgency for the leadership to steer economic growth toward domestic consumption, a policy that is believed to be more sustainable.
The 7.7 percent GDP growth last year equaled that in 2012, the slowest since 1999. Consumption contributed 50 percent of the GDP last year, while investment contributed 54.4 percent. The disparity is explained by the fact that net exports for goods and services were minus 4.4 percent, said Ma, who noted that last year, the tertiary sector, including retail sales and real estate as well as other services, exceeded the weighting of the secondary sector, including industry and the construction businesses, for the first time in three decades.
Investment still dominated growth in 2013 officially, although there is progress in balancing the various elements, said a research note by Lan Shen, Li Wei and Stephen Green, economists in China at Standard Chartered Bank.
Xu Sitao, chief representative of The Economist Group in China, said China's existing growth model is being challenged on many fronts, ranging from protectionism abroad and persistent sluggish demand from the developed world to environment concerns and an inefficient financial system.
The urgency has stemmed from the fact that certain policy leeway is slowly being eroded. For example, over-reliance on fiscal levers would increase financial sector risks, as evidenced by the ongoing jitters within the trust industry, Xu said.
China's new leadership rolled out a comprehensive reform plan to transform its growth model after the Third Plenary Session of the 18th Central Committee of the Communist Party of China in November last year. This helped boost investors' confidence.
As the global economy continues its recovery in 2014, and domestic reforms are yet to be fully advanced, China's economy will grow about 7.8 percent this year. Contributions from consumption and exports will increase, while those from investment will decline, said Tang Jianwei, a senior macroeconomic analyst at the Bank of Communications Ltd.
