China's new normal
- By Dan Steinbock
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E-mail China.org.cn, October 1, 2014
Toward a "long landing," with 10 million jobs
In 2014, real GDP growth will be around 7.2 to 7.5 percent in annual terms. This outcome does require more support from policymakers.
While "big stimulus packages" are a thing of the past, Beijing could deploy temporary increases in fiscal spending, targeted cuts to the reserve requirement ratio, new supplementary lending and support for consumption and investment.
Understandably, policymakers hope to keep growth at the 7 percent bottom line. That's why the People's Bank of China recently cut the rate at which it withdraws liquidity and pumped 500 billion yuan (over $80 billion) in three-month liquidity into the system.
Nevertheless, major policy easing - i.e., a "big stimulus" - is not likely, as Finance Minister Lou Jiwei put it. After all, the government's main goal - new job creation - will be met. As some 9.8 million urban jobs have already been created, the annual target of 10 million will be easily reached well before the year's end.
Despite a lot of domestic anxiety and much more international anxiety, China has begun its "long landing." Structurally, that means transformation to a post-industrial economy, which is a multifaceted structural transition that purely economic reports often fail to understand.
That was the case in 1973, too.
Dr. Dan Steinbock is Research Director of International Business at the India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www.differencegroup.net.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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