As China’s GDP growth slowed to 6.7 percent year on year in the first quarter of 2016, experts said that the country is mildly shifting gears in economic growth, laying more emphasis on structural adjustment and the cultivation of new growth engines.
Li Ping, head of the Institute of Quantitative & Technical Economics at the Chinese Academy of Social Sciences, pointed out that with the growth of China’s overall economy and adjustment in industrial structure, China will unavoidably experience a shift from high speed growth to a medium-to-high growth. He added that China is still facing pressures to cut industrial overcapacity with the new growth engine taking shape, hence, lowering economic growth is in accord with the current stage of development.
Pan Jiancheng, vice director at the China Economic Monitoring & Analysis Center of the National Bureau of Statistics, said that this year, China stepped up efforts in infrastructure construction, with the Belt and Road Initiative, coordinated development of the Beijing-Tianjin-Hebei area, and the Yangtze River economic belt being put into implementation. Also, efforts will be strengthened to promote cost reduction for supply-side reform and reduce the rate of enterprises’ social insurance fund and public reserve funds. All of these moves are expected to have a positive effect on economic growth.
This year’s government work report urged cultivating new growth engines and accelerating the development of a new economy. Li Zuojun, vice director at the Institute of Resources and Environment at the Development Research Center of the State Council, stressed that supply-side structural reform should be pushed forward to foster new growth engines.
While enterprises are the main body of the new economy, reform of State-owned enterprises should also be accelerated, along with reforms on the examination and approval system, commercial system, and price system, which are conducive to the transformation of government functions and could guide enterprises to achieve innovation-driven development, said Li Zuojun.
A recent report on the prospects of the world economy released by the International Monetary Fund raised its growth forecast for the Chinese economy and spoke highly of the measures that China has undertaken for its economic transformation.
Li Ping said China’s structural adjustment was advanced through a number of vibrant high-tech enterprises possessing new technologies, new mode, new formats, but the capacity scale of traditional industry remains large, so cutting industrial overcapacity could pose a big threat to the economy. Also, the transformation of momentum is yet to be completed and innovation-driven development needs to be strengthened.
As for concerns that supply-side structural reforms will bring greater downward pressures on economic operation, Pan Jiancheng said any reforms could bring side effects, while we should focus more on strengthening social policies as support, make plans and preparations, make full use of financial funds, and reinforce regional coordination.
Moreover, Li Zuojun said that cutting industrial overcapacity, de-stocking, and de-leveraging should be combined with the cultivation of new growth engines, new industries and new technologies, which can generate the best effect for supply-side reform and will in turn promote economic growth.