Domestic consumption will draw international firms
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Multinational companies can find more business opportunities in China during the country's economic reform, when domestic consumption will lead the future of the country's economic growth, an observer said.
Robert Kuhn, a US expert on China studies and the chairman of the Kuhn Foundation, made the remarks in an exclusive interview with China Daily in Beijing during the annual two sessions.
Based on the Government Work Report delivered by Premier Li Keqiang at the annual session early this month, China's GDP growth rate target in 2014 is about 7.5 percent, which means the country's GDP is projected to reach nearly $10 trillion.
When the world is worrying about the slowdown of China's economic growth, Kuhn, who is an adviser to multinational corporations on China strategies and transactions, believes the country's GDP is just at a lower growth rate on a higher basis.
"The international community looks at the government report very carefully, especially the numbers for GDP growth and inflation. But from my analysis, if you just read the numbers, you really don't understand what China's economy is," Kuhn said.
About a decade ago, when economic growth rates were 10 to 12 percent, the economy was roughly $2 trillion, so the economic growth was about $200 billion a year, Kuhn said.
"But now China's economy is nearly $10 trillion, and 7.5 percent growth means more than a $700 billion increase, which is 3.5 times the figure decade ago. This is a very strong achievement," he added.
However, looking at the three components of GDP in China - investment, export and consumption, Kuhn said domestic economic growth should pay attention to long-term strategies and to improving efficiency.
For instance, investing in one airport in a city is obviously productive. Investing in two airports would be less productive, and three or four airports would likely be a waste of money, he added.
Kuhn, like Li, said he believes the driving force of a growing economy should be domestic consumption.
"The world is happy to see that because an increase in China's consumption can help to balance trade and lead to the purchase of more imports," he said.
Considering the frugal mindset within Chinese society, especially among the graying population saving for retirement and healthcare, the change will not be a panacea, but consumption will grow normally, Kuhn added.
He said that he believes consumption-driven economic growth will bring more opportunities in the country for multinational companies.
"Businesses in the fields of healthcare, science and technology, pollution control and food safety feel they are very important to China. Those who think it's difficult to do business in China are the ones that manufacture products that China has an abundance of," he said.
