The negative spill-over effect of a slowing Chinese economy is overwhelmingly exaggerated, while the positive effect generated by China's economic structural adjustment is clearly underrated, economic experts said.
As the Chinese economy enters a "new normal" stage with a lower growth rate and the financial market adjustment strengthens, some international news media have claimed that the Chinese economy is pulling down the world economy.
However, abundant data and expert opinions have refuted such a claim, and also call for a rational perspective on the Chinese economy, which still makes sizable contributions to the global economy and will generate long-term dividends for global growth with continued structural reform.
CHINA STILL CONSIDERABLE CONTRIBUTOR
It is true that the 6.9-percent growth rate of the Chinese economy in 2015 is the lowest in recent years. But it is still outstanding amid the gloomy world economy trapped in "new mediocrity."
The Chinese economy increased by 645 billion U.S. dollars last year, which is almost three times the economic scale of Greece, if calculated with an average exchange rate in 2015, according to Bloomberg News. Meanwhile, the U.S. economy grew by 2.5 percent in 2015, with an increment of 400 billion dollars, according to recent calculations by the International Monetary Fund.
Both the absolute value and the rate of China's economic growth surpassed those of the United States last year. It is thus biased to regard the Chinese economy as a source of risk for the global economy, while seeing the U.S. economy as a source of driving power. U.S. Nobel laureate for economics Joseph Stiglitz said on the just-concluded World Economic Forum in Davos, Switzerland, that China has been the engine for the global economy in the past 15 years, especially in the past seven years.
From the perspective of the contribution ratio, China is still a considerable contributor to the world economy instead of a "laggard". China's contribution constitutes 25 percent of the global economic growth at the current growth rate, said Yao Jingyuan, researcher of the Counselors' Office of Chinese State Council.
Optimistic about China's economic growth, Russia's RBC Daily newspaper reported that China's growth will make up at least one third of the world's total in 2016 and 2017, citing analysts' predictions.
NEGATIVE SPILL-OVER EFFECT OVERSTATED
With the recent fluctuations in domestic and foreign financial markets, some overseas media organizations' over-reading on the spill-over effect of the slowing Chinese economy might have sold well, but those reports don't conform with the facts. U.S. exports to China merely account for 0.7 percent of its GDP, and for emerging markets, that ratio is merely 2.3 percent, Goldman Saches' research revealed.
Therefore, China's economy, even with an annual increase rate of 3 to 4 percent, will not create problems for other parts of the world, said George Magnus, researcher with the University of Oxford China Center and senior advisor to the United Bank of Switzerland.
Former U.S. Federal Reserve Chairman Ben Bernanke also said recently that China's slowdown does not seem so severe as to threaten the global economy, so there is no need to worry excessively.
China's transformation on its growth model is much more important than the general GDP figures that people have always been obsessed with, the Financial Times cited Stephen Roach, a senior researcher from Yale University and former chairman of Morgan Stanley (Asia), as saying.
Roach noted that China has been highly successful in its efforts to shift its economic structure from a manufacture-centered to a service-centered one. Stiglitz also pointed out that the market is always short-sighted and fails to notice that China's structural adjustment is imperative.
STRUCTURAL ADJUSTMENT HERALDS FUTURE BONUS
Despite the slowdown of its economic growth, China has been making encouraging progress in structural transformation, which could be seen as a silver lining in the current global economic landscape. China's consumption contributed to 66.4 percent of its GDP growth in 2015, reaching the highest level since 2001.
Meanwhile, the service industry contributed to 50.5 percent of the GDP, 10 percent higher than that of the manufacturing industry, according to data from China's National Bureau of Statistics. Such data has demonstrated that China's economic transformation has been on a fast track.
With a more reasonable growth pattern and a stronger sustainable growth capacity, China's economy will bring about long-term dividends to global economic growth. Jim O'Neill, former chairman of Goldman Sachs Asset Management known for the creation of the BRICS acronym, recently said China's economy has been going through a necessary and complicated transformation, and the recent fluctuations should not overshadow the progress it has made.
Despite the macroeconomic data, the Chinese economy has shown great vigor and vitality in the micro-economic areas such as the film market, outbound tourism, on-line shopping as well as the service industry, in which shared economic belts have promoted technological upgrades.
Growth in these sectors is the fruits of China's economic transformation, which, at the same time, has also provided overseas investors with brand-new investment opportunities in China.
In 2015, global venture capital made 1,555 investments in China's business startups with a total value of 37 billion U.S. dollars, up 147 percent from the previous year, according to data from the London-based consulting firm Preqin Ltd.
China's pro-innovation environment and emphasis on growth quality have been challenging the U.S.-led technological innovation industry, the company said.
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