Rebalancing the economy by boosting services, consumption and innovation will result in global opportunities, a leading professor at the London School of Economics said.
China has launched a series of exciting measures to fuel development of the tertiary, innovation and green industry, even though the country still waits for some of the measures to bear fruit, Professor Danny Quah told the People’s Daily.
Commenting on some views held in the West that China’s economy may face turmoil, Quah said this is weird and extreme view.
In 2005, China’s gross domestic product (GDP) grew 9.9 percent, or $228 billion, to $2.3 trillion. A decade later, in 2015, China’s growth slowed down to about 7 percent, equal to $790 billion. Compared to 10 years ago, China’s growth slowed by nearly 3 percentage points, but the amount of growth is nearly 3.5 times that of 10 years ago.
The economic rebalancing and restructuring will take time, and we should be patient and have faith in China’s reforms, he said.
China is doing the right thing to encourage innovation and consumption, and is expecting a more balanced economy and growth within a more reasonable range, Quah said.
In 2014, consumption contributed to more than half of China’s economic growth, and the services industry contributed to nearly half of the country’s total GDP.
In a country used to relying on extensive farming, low value-added manufacturing and infrastructure to boost growth, efforts are being made to build an economy driven by high value-added industry, consumption and innovation, said Quah.
China is witnessing a technology innovation wave led by companies such as Alibaba and Tencent. But traditional industries, including energy, transportation and infrastructure, also need to be innovative.
China will probably see slower growth under the “new normal”, but Chinese people are likely to spend more as the economy restructures and encourages consumption, according to Quah. That is expected to boost imports and provide more chances to global businesses.
Regarding the Asian Infrastructure Investment Bank (AIIB), Quah said the bank is set to bring more opportunities to developing countries and enhance infrastructure investment in Asia.
The AIIB, as a new multilateral institution, will incorporate high standards and invest in the most needy projects. Countries including the UK, France, Germany and Italy have joined AIIB as founding members, eying new opportunities it may bring.
Quah said the United States’ attitude toward the AIIB is generally negative, because Washington sees it a zero-sum game, and views the AIIB as a rival to Western-led financial institutions.
The bank’s endeavors will result in significant success for China if it enhances development in Asia, he said.