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An objective understanding of economic growth rate

Updated: Oct 28,2015 2:37 PM

The economic indicators released recently showed that China’s gross domestic product grew 6.9 percent year on year in the first three quarters. Though slightly lower than the 7 percent annual goal set previously by the government, it does not necessarily mean that China’s economy is declining. In fact, the economic growth rate of the world’s second-largest economy remains at a healthy range.

Unlike a planned economy, China’s economy is operating as a socialistic market economy in which the market plays a significant role in allocating resources. In reality, the growth rate of the economy is influenced by many factors, such as macro policies, market expectations, production and management, and international market fluctuations.

Under such circumstances, the government’s 7 percent goal serves only as an expectation that the economy should grow within a certain range of around 7 percent.

For example, even though the target of economic growth rate in 2014 was about 7.5 percent, a 7.3 percent growth rate that year still met expectations, indicating that the economy ran within a reasonable range.

In addition, we cannot make a judgment that the economy is slipping off the track by simply looking at the fluctuation of one quarter or a short period of time.

The 7 percent target is an annual target, which means that fluctuations in the first three quarters are normal as measures to rectify safety production, strengthened pollution management efforts, financial market fluctuation, and that international macro-economic policies can affect the economy in a certain period within a year.

In fact, when we look at the job market, economic structure, and global economy, the 6.9 percent growth rate illustrates that China’s economy is still in good shape.

In the first three quarters, 10.66 million jobs were created, completing the annual target of the job market in advance. Up to Sept 1, 77.7 percent of college graduates found jobs, creating a 0.2 percent increase year on year.

People’s lives have also been improved as residents’ per capita disposable income in the first three quarters increased 7.7 percent.

The economic structure is undergoing a changes as new industries are growing on a prosperous momentum. In the first three quarters, the tertiary industry and high-tech manufacturing industry grew 8.4 percent and 10.4 percent, respectively.

Domestic consumption and industries such as information, tourism, and new-energy vehicles also grew at a fast speed.

Compared with other major economies, the 6.9 percent growth rate in the first three quarters ranks China at the top.

As an economy with more than $10 trillion, a 6.9 percent economic growth is also impressive as such growth equals the economy of a middle power.

Of course, downward economic pressure still exists. Difficulties remain in investment demand, exports, industry manufacturing, excess capacity and other areas. But, together with the reform and restructuring efforts to boost the economy, new industrialization, urbanization, informatization, agricultural modernization, and strong domestic demand mean that China’s economy will maintain a healthy development in the long term.