Economy is being led by innovation
Print Edition
THE risks faced by China’s economy are not that scary and the government is confident it can head off the dangers, President Xi Jinping told global business leaders yesterday.
Even if China’s economy were to grow by 7 percent, that would still put it at the forefront of the global rankings, Xi said in his keynote speech to chief executives at the Asia Pacific Economic Cooperation (APEC) CEO Summit.
China’s economy, the world’s second largest, has had a rocky year.
Dragged down by a housing slowdown, softening domestic demand and unsteady exports, growth in the third quarter slid to a five-year low of 7.3 percent, fueling concerns that the government might miss its full-year target of about 7.5 percent.
“Some people worry that China’s economic growth will fall further, can it climb over the ridge?” Xi said.
“There are indeed risks, but it’s not that scary. Even at growth of about 7 percent, regardless of speed or volume, (we) are among the best in the world,” he said.
“China’s economic growth has become more stable and is driven by more diverse forces,” he said.
“Resilience best equips the Chinese economy against risks and given the strategies and policy options at our disposal, we have the confidence and capability to cope with the potential risks,” the president said.
China has adopted innovative ideas in macroeconomic management, and is advancing a new type of industrialization, IT application, urbanization and agricultural modernization, he said.
These measures will help relieve the “growing pains,” he said, adding that China’s economy is driven more by domestic demand, thus steering clear of external risks from an over reliance on exports.
“After 30 years of rapid growth, the size of China’s economy is nothing like what it was. The increment in 2013 was equivalent to the economic aggregate of 1994,” and big enough to rank 17th globally, he said.
China has for some time indicated that lower growth is the “new normal” as policy-makers carry out long-awaited economic reforms and adjust from an economic growth model reliant on investment to one supported by consumption and higher productivity, which in the short run will weaken growth performance.
According to Xi, the “new normal” of China’s economy has emerged with several notable features.
China’s economic growth has slowed down from the previous high speed to a medium-to-high speed, and the economy is increasingly driven by innovation instead of input and investment, he said.
Underlining the country’s growing clout as an exporter of capital, he said China’s overseas direct investment was expected to reach US$1.2 trillion in the next decade.
In the first three quarters of this year, final consumption in China overtook investment by contributing 48.5 percent to the country’s economic growth.
The value added of the service industry, now accounting for 47 percent of China’s gross domestic product, continued to surpass that of the secondary industry, whereas the energy consumption per unit GDP has dropped 4.6 percent, Xi said.
The service sector and consumption demand are becoming the main drivers of the economy, and urban-rural and regional disparities are narrowing, he said.
“The Chinese economy is undergoing profound structural changes and is improving in quality and structure,” he said, adding that the new normal will bring new development opportunities to China.
Meanwhile, the government has also streamlined administration and delegated power, further unleashing market vitality.
“Simply put, we have lifted restrictions on the ‘invisible hand’ of the market and ensured the proper role of the ‘visible hand’ of the government,” Xi said.
After 30 years of almost uninterrupted double-digit growth, China’s economy has lifted several hundred millions of Chinese from abject poverty, but also polluted the country’s air, land and waterways, Xi said.
The destruction of the environment and a yawning income gap has led authorities to promise to enact sweeping social, financial and economic reforms, which are being “put into effect project by project,” Xi said.
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