Since China has been a long-term engine for the global economy, its economic slowdown has understandably sparked concerns among investors and policymakers.
But the economic slowdown fails to underscore China’s contribution of about one-fourth of global growth in a tumultuous year. More importantly, it shed light on the progress of its strategic shift away from a dependence on investment and exports toward more sustainable growth driven by consumption and innovation.
While increasing volatility in financial markets and plummeting commodities’ prices have made vigilance against a global slowdown necessary, pessimism about the $10-trillion Chinese economy, which expanded twice as fast as the world economy last year, is unwarranted.
Instead, the international community can expect the country to serve as a much-needed source of not-so-fast but steady growth for the world economy, as China has made clear its pursuit of average annual growth of 6.5 percent in the coming five years.
Domestically, a close look at the latest statistics may find problems with traditional growth engines such as industrial overcapacity and realty overstock. Yet there are positive signs that point to China’s rise as a consumers’ society; a course that will be further accelerated by the sweeping supply-side reform in coming years.
Growth in investment in factories, housing and other fixed assets weakened to 12 percent in 2015, down 2.9 percentage points from the previous year, and the surge in housing prices in a few large cities cannot brighten the overall picture of the domestic property market.
But they are not the whole story, or the major theme of the Chinese economy, which saw its service sector contribute more than half the GDP for the first time in 2015.
Attention should also be paid to the fact that end-user consumption accounted for 66.4 percent of China’s full-year GDP of 67.7 trillion yuan ($10.28 trillion), while the country’s online retail surged by one-third to 3.9 trillion yuan last year.
It is hard to tell when China’s consumption growth will be fast enough to fill the void in demand left by sluggish investment. But that does not amount to a reason to lose confidence in China’s self-sustaining growth in the long run.