The Chinese economy would continue to take lead at mid-to-high speed as the government has rolled out of a basket of policies to faciliate structural reforms and set a target of an average annual growth rate of at least 6.5 percent through 2020, analysts say.
Chinese Premier Li Keqiang announced the target on Saturday when presenting his Government Work Report, saying the growth rate for 2016 was set at 6.5 to 7 percent. Facing downward risks, volatile securities and sluggish manufacturing, China is exploring a new approach to rein in a slowdown and restructure the economy. "We must work faster to ...carry out supply-side structural reform to improve the quality and efficiency of the supply system, and further stimulate market vitality and the creativity of society," Li said Saturday to the annual parliamentary session of the National People's Congress (NPC) -- China's national legislature.
Policies underlined in the report include more cuts to red tape, support for innovation and entrepreneurship, closure of redundant factories and consolidation of torpid state-owned enterprises.
REFORMS TO KEEP ECONOMIC GROWTH AT TARGETED SPEED
The "supply-side structural reform," a popular notion proposed by China's policymakers in Nov. 2015 as the latest remedy for economic ills caused by breakneck growth, along with a new set of development philosophy, would respond to the slowing economy.
Chinese President Xi Jinping said that the supply-side reform will advance economic restructuring by reducing ineffective and low-end supply, and boost productivity by expanding medium-to-high-end supply. Given weakening labor advantages and a property downturn, the economy will likely experience a V-shaped movement, which requires reforms on the supply-side to refuel growth, said Ren Zeping, chief macro analyst at Guotai Junan Securities.
Premier Li said China will speed up fostering new growth engines, which will be key to the supply-side structural reform. Despite the slowdown in the economic growth digit, China has been making encouraging progress in structural transformation, also a silver lining in the current global economic landscape.
According to State Information Center economist Zhu Baoliang, as the government is making progress in such areas as streamlining administration and devolution of power, protection of intellectual property rights, and fiscal and tax reform, China will continue to see a boom in business startup and innovation by all, improvement in the allocation of resources and a declined reliance on an investment-led economy.
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.
China's consumption contributed to 66.4 percent of the country's GDP growth in 2015, 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 released by China's National Bureau of Statistics.
Such data have 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.
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 upgrade.
Growth in these sectors is the fruit 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.
Besides, China's pro-innovation environment and emphasis on growth quality have been challenging the U.S.-led technological innovation industry, the company said. When meeting with U.S. Treasury Secretary Jacob Lew in Beijing on Monday, Premier Li said China will be more forceful in proactive fiscal policy and will continue structural reform, especially on the supply side, to foster new growth drivers and revitalize traditional drivers.
CHINA REMAINS CONSIDERABLE CONTRIBUTOR TO WORLD ECONOMY
China scored last year a growth rate of 6.9 percent, achieving the target of "around 7 percent". The rate, though the lowest for China in 25 years, is still outstanding amid the gloomy world economy trapped in "new mediocrity." The world's second largest economy, sitting on the colossal wealth of over 10 trillion U.S. dollars, still makes impressive contribution to the global economic growth despite its slowing GDP performance.
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. Besides, the Chinese economy increased by 645 billion dollars last year, nearly three times the economic scale of Greece, if calculated with an average exchange rate in 2015, according to Bloomberg News.
Furthermore, while acting as a driving force of the world economy, Chinese economic transformation is benefiting the world. The great purchasing power of Chinese consumers, for example, has revitalized many economies.
Chinese tourists pay 1.2 trillion yuan (1,844 billion dollars) overseas from their credit cards last year. About six million Chinese went abroad during the week-long Spring Festival holiday season in February. U.S. Nobel laureate for economics Joseph Stiglitz said in January on the 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.
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.
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