What lies ahead

Gary Rieschel, founder of Qiming Venture Partners, expects China's stock market to bounce back this year. [Photo/ Bloomberg]

Gary Rieschel, founder of Shanghai-based Qiming Venture Partners, a $1-billion (760 million euros) fund focused on early stage investments, says 2013 might be the year when growth in China is viewed in a different way.

"I think the China growth story is actually becoming less about the rate of change but the amount of aggregate dollars added to the economy," he says.

"As the economy becomes larger you would expect the rate of growth to slow but it is growing from a bigger base and therefore the volume of business opportunities is increasing."

Mark Williams, chief Asia economist for Capital Economics, the London-based economics research group, was one of the most bearish on the China economy in 2012.

He caused controversy earlier last year by suggesting second-quarter growth was more likely 7 percent, rather than the official 7.6 percent, using flat electricity production data as his benchmark.

Yet he now sees growth in 2013 as higher than in 2012 at 8 percent, although slowing to 7.5 percent in 2014.

"Our view is that the recovery we have seen in the past few months is real but that it is not going to last for too much longer without policy stimulus," he says.

"I think China's long term sustainable growth rate is now between 7.5 and 8 percent and we shouldn't expect it to grow more than that."

Junheng Li, founder of J.L. Warren Capital, says China's economy may slow substantially in the medium term.[Photo/ China Daily]

Junheng Li, founder of J.L. Warren Capital, the New York-based equity analyst firm, says there is a risk that China's growth could slow substantially in the medium term.

She believes the GDP figure could slip below what some see as the psychological 7 percent floor in 2013 and slide further to between 5 and 6 percent in 2014.

"Without large-scale stimulus, I think the economy will continue to slide in 2013. I predict only 5 to 6 percent normalized GDP growth over the next three to five years at best," she says.

Li believes the Chinese government needs to focus on measures that boost consumer spending.

"They need to focus on domestic consumption by improving the pension system. Most of the pension funds are losing money because of the 65 percent slump in the stock market since 2007," she says.

"There also needs to be emphasis on making healthcare and quality education more affordable so people feel confident they can spend money and not always have to worry about putting money aside for this."

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