A bet, a joke and China's economic 'new normal'(3)

Even if double-digit growth could continue, it is undesirable, as the three decades of almost uninterrupted runaway growth came at the high price of air pollution and exploitation of natural resources.

The "new normal" is nothing new. The phrase was first popularized by the California-based bond fund giant Pacific Investment Management Co. to describe below-average growth after the global crisis.

The term gained ground in China in May, when President Xi Jinping, during an inspection tour in central China's Henan Province, described the need to adapt to a "new normal" and remain cool-headed as growth slows.

The idea was expanded upon by Xi at November's APEC Beijing meetings and in a long statement following the three-day Central Economic Work Conference, which closed on Dec. 11.

The statement said the nation must understand the new normal, adjust to the new normal, and develop under the new normal. Coming to terms with the new normal will be the "main logic" for economic growth for some time, it said.

"The economy is evolving into a more advanced growth mode, a more complex division of labor, and a more reasonable structure," it said.

Ma Weihua, a noted banker, said the consensus is that "new normal" means not only slower growth but also, more importantly, an improved economic structure and growth quality.

REFORM

"A competitive economy with quality growth should be innovation-driven. More resources should be pooled to help hundreds of thousands of small enterprises and startups, since they are the main force in innovation," Ma Weihua said.

Small firms and startups are faced with many difficulties, including financing, and more decisive reforms are needed to help them resolve those issues, Ma said.

This year was the first for implementing a grand reform blueprint, which was adopted last November at a key meeting of the Communist Party of China.

The Chinese government intends to promote reforms and readjust the economic structure to shift from an economy led by exports and investment to a more sustainable model driven by consumption and innovation.

Progress was made on a range of reforms, covering such areas as the administrative approval system, financial liberalization, taxation and land markets, service sector deregulation, and State-owned enterprises.

Gu Shengzu, a Beijing-based senior economist, said reform measures, especially those lowering the threshold for starting businesses and removing restrictions on businesses, and the rise of the Internet economy have fueled a new wave of entrepreneurship in China.

Entrepreneurship is unleashing the innovative power of the Chinese people and becoming an important engine for stable growth and a smooth transition to the new normal, Gu said.

According to Gu, the number of newly registered businesses grew by 61 percent from March to August over the previous year, thanks to business registration reform.

In high-tech hubs such as Zhongguancun, Zhangjiang and Donghu, numerous startups have been established by young people with the help of angel funds, he said.

And it was in Beijing's Zhongguancun, which has been called "China's Silicon Valley," where Lei Jun and his friends founded Xiaomi Inc. in April 2010.

On his bet with Dong, Lei was confident. "She will lose it. But she won't lose to me. She will lose to the times," Lei said.