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China still seen as major driving force in global economic growth

Updated: Jan 25,2016 2:14 PM Daily

China’s economic growth reached 6.9 percent in 2015. Amid downward pressure, some are pessimistic about China’s economic future, but many people still have confidence in the world’s second-largest economy as many British economists and investors believe that China will continue to be the main driver of the world’s economy.

According to their point of view, China’s growth rate last year met expectations. In addition, as the Chinese government is making efforts to transform the country’s economic structure, supply-side reform will help drive its economy.

Jan Dehn from Ashmore Group said that with a monthly $60 billion trade surplus and $3.3 trillion in foreign exchange reserves, China’s economic fundamentals are not gloomy at all.

China remains to be the main player to drive the global economy. The China-Britain Business Council (CBBC) said China’s GDP growth was equivalent to Saudi Arabia or Switzerland’s GDP, making a contribution of more than $700 billion production value to the global economy.

Rain Newton-Smith, director for economics at the Confederation of British Industry, said that China’s family income and online retail sales increased 7 percent and 33 percent, respectively, which is a huge opportunity for any economy.

The reason for their optimism over China’s economy lies in the country’s economic structural reform.

A report by BNP Paribas United Kingdom shows the pessimism of Chinese economic development is based on decreased investment caused by China’s economic structural reform and unexpected lowered export growth due to a weak global economy.

But, the bank’s report said, the transition to a service-driven economy is accelerating as the production value of China’s service industry rose from 7.8 percent in 2014 to 8.3 percent in 2015 and the proportion of service industry in GDP increased to 50.5 percent.

CBBC also said last year’s economic data indicated that China is transforming from an investment and export-driven economy to one that is promoted by service industry and consumption.

As for supply-side reform, according to BNP Paribas United Kingdom, the move will inject forces into China’s economic development as the reform focuses on reducing overproduction, leveraging, and taxation.

It predicts that the financial service industry will be a leader in the service industry in 2016.

Furthermore, the lowered GDP growth rate of China does not mean decreased business opportunities, instead, as CBBC noted, Chinese economic transition will create more new business opportunities, especially in education, medical service, finance and professional services, advanced engineering, and retail.

Stephen Phillips, chief executive of CBBC, said that China is pursuing sustainable and higher economic development by improving its industrial production rate, intelligent production and energy efficiency.

These are the fields that British enterprises specialize in and the key areas in which they expect to cooperate with China, he said.