New Normal of China's Economy

The new normal of China's economic development was discussed in New York by Han Jun, deputy director of the office of the Central Leading Group on Financial and Economic Affairs, at a briefing on China's 13th Five Year Plan at the Chinese Consulate on Monday.

"People should have confidence in the renminbi," Han said.

With China's economic situation and development trends, there is no basis for the continuing depreciation of RMB. China will further improve the marketization of the RMB exchange rate regime and maintain a relatively stable RMB exchange rate on a reasonable and balanced basis.

Last November, the RMB was approved by the International Monetary Fund to join its Special Drawing Rights (SDR) basket as a fifth reserve currency, joining the dollar, euro, pound sterling and yen.

Joining the SDR has become a strong support for the RMB exchange rate, which makes the possibility of an RMB exchange rate going out of control nonexistent, Han said.

China has promised to avoid competitive depreciation of currencies and a currency war. Further, China will not stimulate exports by depreciating the RMB and the two-way fluctuation (deprecation and appreciation) of the RMB exchange rate will be a new normal in the future, Han said.

China's economic growth of 2015 is expected to be 6.9 percent, which is still impressive, given the backdrop of a weakening global economy, he said.

During the global financial crisis in 2008, China's economic growth had slowed down, but it was still one of the fastest growing economies. From 2009 to 2014, China maintained an average annual economic growth of 8.7 percent. Han said China's economy made an important contribution to the recovery of the world economy: during those five years, China's contribution world economic growth accounted for more than 30 percent.

There is no so-called "hard landing" of China's economy, nor a "derailing", Han insisted.

With the increase in China's economic aggregate, the slowing economic growth is consistent with economic rules and trends.

In the future, China's economic development mode will be definitely be undergoing a transformation, which will transform from export-driven to domestic demand-driven, from investment-driven to consumption-driven, from rough development to innovative development.

China's economy appears to be heading downwards but has not yet bottomed out. China's economy will not show the "U" shape trend or "V" shape trend, but "L" shape trend for a while. The less than 7 percent growth will continue for some time. The success of China's economic transformation will be beneficial to the world.

To ensure the doubling of the GDP and the per capita income of urban and rural residents in 2020 by 2010's goal, Han said it must maintain a necessary growth rate. The bottom line of China's average annual economic growth rate should be more than 6.5 percent.

Liu Peilin, deputy director-general and research fellow of the Department of Development Strategy and Regional Economy, Development Research Center of the State Council, attended the briefing.

He said, in the upcoming five years, China's potential economic growth rate is between 6-and-7 percent, according to a number of reports. During this time, China would achieve a higher growth than 6.5 percent, but many factors were uncertain.

In the future, China will value high-quality economic development more than the economic growth rate as an indicator, Liu said.

xiaohong@chinadailyusa.com