Reform blueprint highlights quality, efficiency of economy

After a series of key conferences on the economy last year, China's reform framework and crucial areas have been hammered out clearly.

As senior leaders have repeatedly emphasized, China will focus more on innovation, the quality and efficiency of the economy than pure gross domestic product (GDP) expansion and economic growth acceleration.

This meant China could sacrifice its high growth rate to gain the fruits of structural reform, analysts said, noting the country had showed its determination in dealing with challenges.

China should avoid focusing simply on economic growth targets, which were considered part of the traditional planned economy and ran contrary to the new leadership's stated intention of letting the market play a "decisive role," Stephen Roach, senior fellow at Yale University's Jackson Institute for Global Affairs, said.

The leadership in fact has been seeking to downplay a specific GDP number, proposing a "rational scope of economic operation" instead, which means that the macro-control measures are aimed at a "rational sector" that is constantly changing with China's potential growth rate.

"Any model that predicts China's future GDP growth must include, if it is to be valid, a variable that reflects estimates of the amount of hidden losses buried in the banks' balance sheets," Michael Pettis, professor at Peking University's Guanghua School of Management, wrote on his blog.

"If it does not, it cannot possibly be a valid model to describe China's economy, and its predictions are useless," he said.

At the same time, diluting the importance of the GDP indicator signaled the central government is beginning to lay emphasis on the quality of the economy in a bid to realize a delicate balance between growth and adjustment.

Roach said "slower GDP is actually good for China, provided that reflects the long-awaited structural transformation of the world's most dynamic economy."

"A re-balanced China can grow more slowly for one simple reason: By drawing increased support from services-led consumer demand, China's new model will embrace a more labor-intensive growth recipe," he said.

"The numbers seem to bear that out. China's services sector requires about 35 percent more jobs per unit of GDP than do manufacturing and construction -- the primary drivers of the old model," Roach explained.

Nobel laureate Joseph Stigilitz called for correctly unscrambling China's slowdown, saying "China will stay the course on sustainable growth (despite deceleration) ..." and this benefits not only China, but also the world for the long term.