China's upgraded growth model provides fresh opportunities for world

BEIJING -- "Reforms," "adjustments" and "transformation" are the key words used by world media in their reports about Chinese economy discussed at this year's annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference.

The transformation of China's growth model features expansion of domestic demand, new-type urbanization and innovation-driven development.

Analysts said such a growth model will provide fresh opportunities for the whole world.

Expansion of domestic demand injects new impetus into global economy

The government work report delivered at the NPC opening session last Tuesday has urged unswerving efforts in taking expansion of domestic demand as the government's long-term strategy for economic development, letting consumption play a "fundamental" role and investment a "key" role.

The Wall Street Journal said in its comment about the work report that the Chinese government is determined to shift its economic growth from an export-oriented model to one driven by domestic demand.

It is commonly believed that there is severe imbalance in the old global economic cycle that features over-consumption and debt accumulation in developed nations and high savings and strong exports in emerging countries.

The model in which China merely acts as a supplier to meet foreign demand can no longer be sustained after the financial crisis.

The policy signals sent by the NPC and CPPCC annual sessions revealed that China has decided to vigorously boost domestic demand, so as to transform its growth pattern and avoid the "middle-income trap."

The shift will not only sustain China's own development but also inject new impetus into the global economy and create more dividends for the world.

Reinforced Chinese demand can boost exports to China, which can help with economic growth of those exporting countries. Meanwhile, economic growth in those countries can produce new demand for Chinese products and the new demand can further benefit China to generate more demand for overseas products.

The world economy is expected to establish a new-type cycle based on "Chinese demand," Goldman Saches said in its research newsletter.

Andrei Ostrovsky, deputy director of the Far East Research Institute of Russia's Science Academy, said China's biggest advantage is to have a huge domestic market and the new-type urbanization strategy heatedly discussed at the two sessions holds key to activating the market.

China's urbanization ratio lags far behind developed countries, where the ratio averages 70 percent.

With an increase of every 10 million urban dwellers, investment in infrastructure will grow 1 trillion yuan (about $629 billion), according to the China Institute for Reform and Development.

And the ensuing reforms in income distribution, social security and public service systems will unlock the full potential of domestic demand in the economy, the institute said.

Nicholas Borst, a research analyst at the Peterson Institute for International Economics, said China's urbanization provides a vital opportunity for the world.

Infrastructure construction during the urbanization process will provide opportunities for high-tech companies overseas while the influx of rural citizens will drive up consumption and expand domestic demand, which will in turn generate deals for foreign companies selling products and services, he added.