China lowers growth target, eyes better quality(2)

QUALITY

"The growth target is lower than last year, but our economy is already the world's second largest in terms of size. As such, we have to turn to healthier growth," said Jack Ma.

China cannot, and should not, get stuck on the high speed growth of the past. We should pursue more quality growth, he said.

The premier promised that the government will work to ensure that the economy performs within an appropriate range, and focuses on strengthening the quality and benefits of economic development.

David Dollar, senior fellow with John L. Thornton China Center under the U.S. think-tank Brookings, told Xinhua that a slowdown was realistic.

Investment had been high in recent years and this has created excess capacity in housing and manufacturing, especially sectors such as steel and cement.

On the face of this excess capacity, investment is naturally slowing and that drags down GDP growth, Dollar said.

Doug Oberhelman, chairman and CEO of U.S.-based construction and mining equipment maker Caterpillar, said China's shift from double-digit growth to a medium-high growth was inevitable; no economy can grow at a double-digit rate forever.

The Chinese economy is expected to go through a slower but more sustainable growth as well as cycles that we have seen in the United States and Europe, Oberhelman told Xinhua in an earlier interview.

The slower growth rate would not mean Caterpillar assets in China would shrink, but rather the company would experience a slower rate of expansion, he said.

EMBRACING NEW NORMAL

The announcement has fed media sensation. Some argue that China's economy is losing steam and growth may plunge to as low as 5 percent, spelling disaster for the Chinese and world economies.

Analysts said the Chinese economy still enjoyed sound fundamentals with no possibility of a hard landing and had room for further growth.

"There is no need to over-interpret the lowering of the growth target," said Li Daokui, head of Tsinghua University's Center for China in the World Economy.

What needs more attention is whether China could further reduce risks related to finance, property and local government debts, he said.

"What remains to be seen is whether the government enables the real economy to enjoy better financing environment," he said.

The job market is not under much pressure, as one percent of GDP growth at the current time has the potential to create nearly 2 million new jobs, Li said.

After decades of staggering growth, China is entering a stage of medium-high growth: the "new normal."

The term gained ground in China in May 2014, when, during an inspection tour of central China's Henan Province, President Xi Jinping described the need to adapt as growth slowed.

In the 35 years between 1978 and 2013, annual growth of the economy averaged close to 10 percent, and between 2003 and 2007 it was over 11.5 percent. However, the "good old days" had to end and growth decelerated to 7.7 percent in 2012 and 2013.

"I do not see this as a problem for China or the world, as long as the slowdown is gradual," Dollar said.

Recent trade data indicates that China is importing less commodities like iron and copper, and that has some negative effect on the economies that depend heavily on exporting these primary products. However, at the same time, China's import appetite has turned to other items, he said.

"China will continue to provide a lot of demand for other economies, but the nature of that demand is changing," he added.

Indeed, the Chinese economy is not teetering on the edge of a cliff, but at a new starting point and ready to embrace new opportunities.