China's economy to grow faster in 2013(2)

GROWTH PATTERN CHANGES

Zong Liang, deputy director of the Institute of International Finance of the BOC, said that China will be in a "new normal state" in the following years with its annual growth rate between 7 and 8 percent.

But the report pointed out that factors behind China's fast economic growth in the past 30 years are undergoing profound changes and the past development strategy needs systemic revaluation and readjustment.

First, the effects of "three major dividends" from the population, market and globalization will wane gradually.

Second, high growth rate in the past led by the "investment-export" external circulation is unsustainable and should be shifted to "investment-consumption" internal circulation, which could be a long process though.

Third, as the global economy is confronted by the challenge of rebalancing, China's export-led development strategy needs revaluation and readjustment with increasing cost of production factors and resources and environmental pressure.

EXTERNAL RISKS

In 2013, due to external uncertainties, experts say that investment and consumption will become the two main engines for the mild recovery, with consumption playing a bigger role.

Zhu Haibin, chief China economist at JPMorgan Chase & Co, said that downside risks would be from the external environment in 2013, even though the overall situation will improve.

Hidden danger brought by the U.S. "fiscal cliff" and the European debt crisis will still be there, according to the BOC report.

The RMB exchange rate will further appreciate amid fluctuations, which is unfavorable for export-oriented enterprises.

In addition, the increasing labor and financing costs together with more protectionist measures by some countries will do harm to the foreign trade companies.

The report predicted that China's export and import next year will grow 8 percent and 6 percent respectively.