NEW normal,” a cliché in the West, has become the current buzzword in China to describe the status of the economy.

Some analysts said the catchphrase here has a slightly different connotation from the terminology used to describe the economic landscape resulting from the 2008 global financial crisis.

“Compared with Western countries, China’s ‘new normal’ is better, with much faster growth and much less unemployment,” said Peter Hall, vice president and chief economist at Export Development Canada.

The term gained ground in China after President Xi Jinping used it last May, saying the nation needed to adapt to a different economic environment as policy-makers apply the brakes after decades of rapid, sometimes unruly, growth.

In the years between 1978 and 2013, China’s growth averaged close to 10 percent a year. That, in essence, was the “old normal,” analysts said.

During the Asia-Pacific Economic Cooperation meeting held in Beijing in October, Xi further clarified the state of the “new normal.” He said it is characterized by more moderate growth, an upgraded industrial structure and more focus on innovation as an economic driver.

In the first three quarters of this year, China’s gross domestic product expanded 7.4 percent from a year earlier, its weakest performance in five years but still a world pacesetter.

Data in recent months showed continued moderation in industrial production and fixed-asset investment. The widely watched HSBC Flash China Manufacturing Purchasing Managers’ Index for December came in at a seven-month low of 49.5. That was its first signal of contraction in seven months.

Official industrial production figures for the month haven’t been released yet. In November, they posted a disappointing 7.2 percent gain, dropping from a rise of 7.7 percent one month earlier. That was the second-lowest monthly reading since April 2009, with only August recording a lower rate of 6.9 percent due to power shortages that forced temporary factory closures.

“China has a pressing need to transform its growth model,” said Wang Tao, a UBS economist. “Policy-makers have recognized the marginal effects of wholesale easing, and market forces, rather than the government, should play a larger role in unlocking new sources of growth and guiding economic structuring.”

Indeed, increasing consumer demand for better services, eroding export competitiveness in labor-intensive sectors, overcapacity in many traditional industries, shifting demographics and heightened environmental and resource constraints all add up to the fact that what worked in the past in China is no longer viable.

At this year’s Central Economic Work Conference, a key policy-making meeting recently concluded in Beijing, “growth stabilization” topped the agenda.

China will stick to a “proactive” fiscal policy and a “prudent” monetary policy next year, according to the statement released after the meeting. But, “fiscal policy will be stronger and monetary policy more focused on striking a proper balance between tight and loose.”

Global financial crisis

The words are nothing new. China has kept what it calls a “proactive fiscal policy” since late 2008, when the leadership rolled out a 4 trillion yuan (US$643 billion) stimulus package to combat the adverse impact of the global financial crisis. So-called “prudent monetary policy” has been in place since 2010.

The terms, it seems, are too subtle to warrant alteration. But at the recent meeting, President Xi, Premier Li Keqiang and other leaders stressed that the economy still faces many challenges and relatively big downward pressures. Their policy stance might seem rigid in wording, but it was actually relaxed in November when the central bank cut interest rates for the first time in more than two years. “Although the risks are generally within control, it will take a while for China to gradually absorb them,” the leaders were quoted as saying.

Risks in the real estate sector no doubt remain one of the nation’s biggest challenges.

Earlier this month, the Asian Development Bank cut its 2014 growth forecast for China to 7.4 percent from 7.5 percent and lowered its 2015 estimate to 7.2 percent from 7.4 percent. The major trigger for the revisions is the continuing correction in the property market and its knock-on effects in related sectors like construction.

Property comprises about 20 percent of GDP.

Wang at UBS said: “Property sales in November contracted 11 percent year on year, contrary to the improvement suggested by housing-related data in many cities. New property starts declined sharply, and land purchases plunged as well. We expect new starts to drop by 10-15 percent in 2015 and see the property downturn as the largest risk to growth next year.”

Last year, there was heated debate among economists about whether China should cut its growth target to 7 percent instead of using the weasel words “about 7.5 percent.”

This year, the debate seems to have vanished. No matter what the official goal, many economists are braced for the growth rate to drop below 7 percent.

Zhou Hao, an economist with Australia & New Zealand Bank, said Chinese authorities likely will tolerate slower economic growth under the framework of “new normal.” He is predicting growth of 6.8 percent in 2015.

Tom Orlik and Fielding Chen, two economists with Bloomberg News, said in a recent report that the government may well set a lower growth target and that they expect the rate to be between 6.7 percent and 7.2 percent next year, depending on the depth of the real estate slowdown, strength in global demand and government policy actions.

Export Development Canada’s Hall, however, is the voice of optimism. He said he expects China’s growth to rebound to about 8 percent next year, supported by the economic revival in the United States, which just reported a surprisingly good 5 percent increase in GDP for the third quarter.

“The revival in the US is strong enough to support China’s growth at 8 percent in 2015,” Hall said in an interview earlier this month.

That might be welcome relief to those who worry about this country’s economic trajectory, but it doesn’t bode well for the government’s goals to reduce China’s reliance on exports.