World needs to understand China's 'new normal' growth(2)

The Chinese leadership has repeatedly indicated that slower growth is the "new normal" as the country carries out tough reforms and adjusts from an economic growth model reliant on investment to one supported by consumption and higher productivity, which in the short run will weaken growth performance.

In the 35 years between 1978 and 2013, annual growth of the Chinese economy averaged close to 10 percent and, between 2003 and 2007, it was over 11.5 percent.

However, the "good old days" are gone, at least for now. Growth decelerated to 7.7 percent in 2012 and 2013, and in the first three quarters of 2014, its was down to 7.4 percent.

In Shen's opinion, it is not only China but the global economy in general that is facing a new normal with slower growth compared with that before the 2008 global financial crisis. Structural reform has topped many countries' policy agendas worldwide.

China is still the leading growth engine among emerging markets, thanks to the country's responsive targeted growth-supportive measures in the last few months and strong consumption potential as evidenced by the shopping bonanza driven by a growing e-commerce trend, Shen said.

He suggested setting a looser GDP growth target range that outlines a "bottom line" to offer more space for local governments to push reforms.

"Anyway, structural reform is key to future prosperity, and in this regard, we should think positively about the 'new normal' state of China and the global economy," Shen said.

Apart from the GDP growth rate, Chinese policymakers consider new jobs as well as the consumer price index to be the most important indicators for judging economic performance.

More than 10 million new jobs were created in the first nine months, a figure that beat the government's full-year target, official data showed.

Li Yining, a renowned economist with Peking University, said it is surprising that employment has been growing despite the economic slowdown.

That should be attributed to the government's continuous reforms to streamline administration and delegate approval power and the rise of innovation and entrepreneurship in China, Li said.

More than 9.2 million enterprises were registered in the first nine months, up over 60 percent year on year, which Li said was a profound change and an important potential engine powering future growth.

In Tasker's observation, three decades of rapid growth have resulted in a surge in internationally competitive and globally minded multinationals in China. The innovations of the likes of Alibaba, Tencent, Xiaomi and Huawei and others are astounding.

On the other hand, China's development into a modern economy is far from finished. According to the country's urbanization blueprint, another 100 million people will live in cities by 2020. That equates to investment of around 6 to 8 percent of GDP a year. China's urbanization and industrialization still have a way to go, Tasker said.

The Chinese leadership has also repeatedly expressed confidence in economic growth in the long run.

President Xi, in a speech on Saturday at the G20 summit in Australia, said China's economy will maintain growth and make greater contributions to the global economy.

Thanks to various domestic reforms, the Chinese economy will maintain its momentum for powerful, sustainable and balanced growth, and provide the world with greater demand and more opportunities, Xi added.