Accelerate restructuring

China's exports registered better-than-expected performance in 2012, the 7.9 percent growth year-on-year, prompting optimists to predict an even better performance this year.

But considering the external and domestic situations, policymakers should prepare for the slow growth to continue this year.

Although the US economy is recovering, albeit slowly, and the loose monetary policies of major world economies will bolster better prospects for demand, the uncertainties caused by the bipartisan bickering in the United States over the debt ceiling and the ongoing European debt crisis will offset the trade-support measures already launched by the world's largest exporter.

At the same time, the rising operational costs at home and the increasing protectionism overseas are putting increasing pressure on China's exporters.

Therefore it is doubtful the unexpectedly good performance of the export sector in 2012 will carry over into this year.

Taking a longer view, the world economy is mired in difficulties. Given the lack of technological breakthroughs it has had to rely on monetary easing to achieve short-lived growth while remaining wary of the money-driven risk of rising inflation.

This situation is likely to persist in the coming years, as there are few signs of substantial improvement. In other words, the global economy will no longer be as capable of absorbing China's output as before.

After thirty years of fast growth, China is now facing the challenges of rising costs, environmental degradation and a shortage of resources. These, together with a lack of core technologies, mean its overall growth may slow, which will reduce the growth momentum of its trade sector.

However, this would not necessarily be bad news for China. While it would cause a temporary loss of jobs, it would force the country to accelerate its economic restructuring, something it urgently needs to do given the sluggish recovery of the global economy.

For an economy as large as China's, over-reliance on external demand is dangerous, as its wobbles over the past three years due to the global financial crisis demonstrate.

The country should take advantage of the global correction to accelerate the pace of its economic restructuring to create sustained growth momentum in the coming decades.

(China Daily 01/11/2013 page8)