Potential for China's economy lies in improved efficiency

A worker welds at a construction site in Yiliang, Yunnan province, February 28, 2015.[Photo/Agencies]

China's gross domestic product (GDP) grew 6.9 percent in the first three quarters, down 0.1 percentage point from the first half of this year, and 0.4 percentage point over annual growth last year. Such a decline is de facto modest and normal.

However, given the size of China's economy the decline couldn't be further from normal as the country undergoes profound structural adjustment and upgrading, with shifting growth momentum. The deceleration of China's economy and the future development of China have always been at the center of controversies.

China's economy is slowing down, but still within a reasonable range. First, the traditional economy is faced with mounting downward pressure and international economic growth falls short of expectations. The government has taken positive steps to strengthen targeted control, deepen reforms and boost structural adjustment, in a bid to keep overall growth within a reasonable range.

Downward pressure mainly originates from the decline in exports, investments and industries. Between January and September, exports fell 1.9 percent, significantly lower than expected. The decline is understandable as the world economy is still undergoing deep re-adjustment, and it takes time for new growth engines to take off. The foundation for global recovery is shaky.

Fixed-asset investment grew 10.3 percent during the same period, down 5.8 percentage points from a year earlier. Among that, real estate investment increased just 2.6 percent, down 9.9 percentage points from last year. Meanwhile, industrial added value increased 6.2 percent, down 2.3 percentage points over the same period last year.

Despite that, the country's economy is stabilizing. On the one hand, economic growth and employment remain steady. The first three quarters witnessed GDP growth of 7 percent, 7 percent and 6.9 percent respectively, consistent with the annual target set at the beginning of this year. More than 10 million urban jobs were created during the same period, meeting the annual target ahead of time. A survey shows the monthly unemployment rate mostly stood between 5.1-5.2 percent.

On the other hand, consumer prices remained sound in the first three quarters. The CPI was accelerating but came in at 1.4 percent on average from January to September. There is no inflation or deflation that many are worried about. At the same time, consumption, home sales and income are also growing steadily

Second, China's economic growth, standing at around 7 percent, is still more than twice the world average, and tops all emerging economies. More importantly, it is one of the world's most dynamic countries underpinned by its reform and opening up, "Internet Plus" strategy, and entrepreneurial endeavors. A group of Internet companies, including Alibaba, Tencent and Jingdong, have joined the ranks of world elites. The country's slowdown is not only the result of its internal mechanism, but also the gloomy world economy.

China's economy is undergoing structural optimization and upgrading while maintaining steady, albeit decelerated, growth. Its development mode is shifting rapidly, partly driven by growing enthusiasm of innovation and entrepreneurship as well as breakthroughs in international capacity cooperation.