World needs to understand China's 'new normal' growth

It has been an eventful week in China, not only because the country played host to a successful APEC meeting, but also because Chinese businesses are busy fulfilling orders foUSr goods snapped up online Tuesday during a national e-commerce extravaganza.

The unprecedented Singles' Day sales volume of 9.3 billion US dollars in 24 hours, made possible by both foreign and domestic consumers, is one of a few encouraging signs in the world's second-largest economy, which is undergoing a clear slowdown.

China is having a rocky year, with growth sliding in the third quarter to a low not seen since the 2008-2009 global financial crisis in the third quarter, dragged by a housing slowdown, softening domestic demand and unsteady exports.

China's GDP is likely to grow slower than the government-set target of 7.5 percent this year, but it will still outperform other countries and people should understand China's "new normal" growth, said Shen Jiangguang, chief economist at Mizuho Securities.

The slowdown has been labeled the "new normal," which Chinese President Xi Jinping elaborated on at last week's APEC Beijing meeting.

"A new normal of China's economy has emerged with several notable features," Xi said last Sunday.

First, the economy has shifted gear from the previous high speed to a medium-to-high speed growth. Second, the economic structure is being constantly improved and upgraded. Third, the economy is increasingly driven by innovation instead of input and investment, Xi said.

A raft of weaker-than-expected economic data released later last week further signaled downward pressures for China's economy. Total retail sales, industrial output and fixed asset investment all posted lackluster performances in October, causing more concerns of continued sluggish growth.

The Chinese economy has been the world's outstanding performer since 1980, but now it is entering a new phase of development, observed Clive Tasker, CEO of the Standard Advisory (China) Ltd.

Investment as a share of GDP will fall in coming years. This is normal in industrialization. It is no surprise that fixed asset investment is growing more slowly, Tasker said.

"First and foremost, a hard landing is not what we will see. China is undergoing a reduction in its potential growth rate. But even growth of 6 percent over the next five years will require constructive and smart reforms," said Tasker.