Growth on right track despite pitfalls

China's annual economic growth target of about 7 percent in 2015 is rational and necessary. As a developing country, China still has strategic opportunities, and its investment and consumption remain two effective growth boosters despite weak demands for its exports.

Some of its industries may be outdated or burdened with overcapacity as their comparative advantage fades away, but many more must be upgraded from the lower end to the middle and higher ends of the industrial and value chains, which requires large and accurate investments. A rational solution to the environmental pollution too rests with investments in advanced equipment and production methods, rather than closing down the factories.

The Chinese government's debt accounts for only about 40 percent of GDP, while the ratio exceeds 100 percent in many other major developing and developed countries. It means China has more room to use its fiscal policies to stoke growth. Besides, Chinese people's savings ratio is the highest in the world and China has the largest foreign exchange reserves.

These favorable conditions make it easier for China to use the good investment opportunity offered by the global periodic downward pressure. Accurate and efficient investment creates jobs, and more jobs mean higher consumption. And since robust consumption also attracts new investment, China can realize this year's growth target of about 7 percent, a rate that would also ensure enough jobs are created in the years to come.

Yet a 7 percent growth rate is not that easy to achieve this year. Some factors have to be addressed to prevent China's economic policies from being led astray.

First, many have said the growth rate should be compromised to fight pollution and clear the smog covering many Chinese cities. But air pollution is not caused only by economic growth. India's economic growth has been slower than China's over the past 36 years, but air pollution in India is hardly better. Coal is vital to the advantages the Chinese economy enjoys. But it is more polluting than oil and natural gas, and China has enjoyed its benefits and suffered its harms. The fact is, the faster China grows, the earlier it will bid farewell to the lower-end manufacturing phase and the heavy pollution associated with it.