China's reform inspires fresh vigor in economy

The new Chinese government achieved a steady yet impressive start last year, and some remarkable new economic achievements were made as the country pushed its comprehensive reform into high gear.  [Special coverage]

First, China has maintained its economic growth target for 2014 at about 7.5 percent, the third consecutive year the government has targeted that figure.

China's economy grew by a robust 7.7 percent in 2013, one of the strongest performances globally. Amid slower growth and weak market demand globally, China contributed nearly 30 percent of global growth by striking a balance between its economic growth speed and growth quality.

"China is a hero in the recent economic recession. If China hadn't been there, that recession could be much worse for Europe and for the United States," said Eric Maskin, the Nobel Economic Prize Laureate and professor at Harvard University.

Maskin said the economic reform agenda outlined by the Chinese government late last year was heading in the right direction, pointing out that growth rates of 9 or 10 percent could not last forever, no matter what kind of policy China adopted, because the country had reached the point where it was no longer so much in "catch-up mode," but at the productivity frontier.

Secondly, China's economic growth became more quality-oriented as the country's consumption surpassed investment for the first time to become the largest contributor to the economy's growth.

This year's government work report showed China will make domestic demand the "main engine" of growth, and will focus on boosting consumption in working to increase domestic demand.

The government also vowed to enhance people's ability to consume by increasing their income, improve consumption policies and fostering new areas of consumption.

Steven Barnett, a division chief in the Asia and Pacific Department of the International Monetary Fund, said boosting consumption was all about achieving economic rebalancing.

External rebalancing was the export side of the story, and the domestic rebalancing was about consumption, Barnett said.

The rebalancing would be achieved if the third plenum reforms could be successfully implemented, Barnett said. "The reforms will achieve a good byproduct of successful rebalancing."

Thirdly, the proportion of China's GDP contributed by the tertiary industry surpassed that of the secondary industry for the first time in 2013, causing essential changes to the country's industrial structure.

The government work report said the country would give high priority to developing production-oriented service industries, and carry out pilot and demonstration projects to advance the comprehensive reform of the service industry.

Meanwhile, the government will also strive to integrate the development of cultural and creative industries as well as design services with related industries, and speed up the development of insurance, business and science and technology services.

Nicholas Lardy, a senior fellow at the Washington-based Peterson Institute for International Economics, said the service sector would become more important in the future. He predicted the proportion of the service sector to China's GDP would reach 50-55 percent in the coming five to 10 years.

Fourthly, the government has made tremendous efforts in deepening reform of the administrative system with an aim to ensure the market plays the decisive role in allocating resources and the government better plays its role.

The work report said that, in 2014, the government would cancel or delegate to lower-level governments an additional 200-plus items requiring State Council review and approval.

Fifthly, China became the world's largest goods trading nation for the first time in 2013, when its annual trade in goods passed the 4-trillion-U.S.-dollar-mark, and its commodity structure of international trade was also being steadily optimized.

The government work report showed China's total imports and exports are projected to grow at about 7.5 percent this year.