A bet, a joke and China's economic 'new normal'

With only days left in 2014, it is fair to say that many people didn't expect China's economy to see such a slowdown a year ago. Most people didn't predict China would stay in the lower range of the government-set annual growth target of around 7.5 percent for the first time in 15 years.

However, the Chinese leadership sees the slowdown as a necessary pain and a window of opportunity for more decisive reforms, and they call for the nation to "actively adapt" to the new normal.

The new normal means adjusting to growth that is slower than the average 10 percent seen during the first 30 years of economic reforms. More importantly, it also means more sustainable and efficient growth for several decades to come -- at least, that is the aim.

BET, JOKE

In 2014, the landscape of China's economy changed notably as old key engines such as property and manufacturing suffered oversupply and lost momentum, while new engines such as high-tech industries and Internet-related businesses saw booming growth.

Summing up China's new economic climate is a bet between two business tycoons and a bitter joke about the property market's new role.

The bet, worth 1 billion yuan (163 million U.S. dollars), dated back December 2013 when Lei Jun, who founded Internet company Xiaomi Inc. in 2010, said Xiaomi would outdo air conditioner maker Gree Group led by president Dong Mingzhu in business volume in five years.

In 2014, Dong repeatedly said she would not lose the bet. In her speech on Dec. 14 at a Beijing forum, she again insisted that she would win.

In her speech, Dong also slammed the alliance between Xiaomi Inc. and major home-appliance maker Midea, one of Gree's rivals, which Dong accused of stealing her company's patents. "Two crooks together make a team," she said.

Neither Lei Jun nor Midea's management responded. Instead, Xiaomi and Midea said in a statement that they aimed to introduce interactive products for smart homes, which Lei said would be "the next trillion dollar-scale market."

In 2014, Chinese Internet companies such as Xiaomi Inc., Baidu and e-commerce giant Alibaba continued to rise rapidly, significantly outperforming traditional industrial firms including Gree, which suffered excessive capacity and falling profit margins.

This year, Lei rose to become one of the icons of China's burgeoning Internet economy, along with Alibaba Group Chairman Jack Ma. In September, Alibaba stunned everyone with a record-shattering IPO in New York, which generated an eye-popping 25 billion US dollars.