The economy is witnessing a historical transition as it shifts from high-speed growth to a medium-to-high level. In a period when the economy still faces tough downward pressure and many financial risks, it still has the potential to maintain a relatively high-speed growth and develop to a higher level.
A logical economic slowdown
In the light of international experience, the slowdown of China’s economy from 2011 is a natural adjustment after a long period of rapid growth.
The historical path of China’s economy is close to Japan and South Korea’s that witnessed an average 30-percent drop. According to the purchasing power parity, China’s GDP per capita now has reached 11,000 Geary-Khamis dollars at the same purchasing level of 1970’s Japan and 1990’s South Korea, which means China’s economy is crossing the border to shift into a medium-to-high level of economic growth.
The adjustment of China’s economic structure is rapid while the economic growth is slowing. The proportion of agriculture in three industries is down below 10 percent as the proportion of the tertiary industry (service sector) passed the secondary industry (manufacturing).
The domestic demand structure keeps optimizing as the economic structure gradually shifts focus onto services and consumption and the economic growth impetus is changing.
Regions which rely heavily on resources and the heavy industry suffer a bigger drop in economic growth when the economic structure is adjusting. But regions with an earlier adjustment and more reasonable industrial structure are witnessing relatively stable economic growth.
For example, compared with other provincial regions, Guangdong, Jiangsu, and Zhejiang have made huge strides in transitions as their GDP per capita reached 11,000 Geary-Khamis dollars in 2008.
At the industry level, the heavy industry has witnessed a huge drop, contributing 75 percent of the fall in the producer price index (PPI) while other industries and service industries are relatively stable. The traditional retail industry faces downward pressure but e-commerce is growing fast.
At the enterprise level, companies, which swiftly readjust their industrial chain, take part in global competition with cutting-edge technology, and value research and development and innovation, are operating in a stable manner with promising prospects.
Growth has many advantages
Although China is facing huge downward economic pressure, the country still has many advantages to achieve a relatively high economic growth.
China has a great potential as:
* It has a comprehensive industrial system and supporting industrial capacity;
* Industrialization and urbanization are still on the way and there still remains a huge regional development gap;
* Many sectors are not open enough and more space remains to ease market access;
* It has become the world’s largest Internet and mobile Internet economy;
* It has a huge market which provides space for industrial development and innovation;
* There are a lot of opportunities in a new round of adjustment in the global economy.
Moreover, through the “Belt and Road Initiative’’, “going global strategy’’, and international capacity cooperation, China will further integrate into globalization and Chinese products and services will be more competitive.
(The author is Wang Yiming, deputy director of the Development Research Center of the State Council)