China's economic slowdown needs unique justification

By Zhang Lijuan
0 Comment(s)Print E-mail, March 8, 2016
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Haier products get a thumbs up from a client at the 117th Canton Fair held in Guangzhou, capital of south China's Guangdong Province, from April to May 2015 (XINHUA)

China's economic slowdown is now a conundrum. According to economic theory, stock indexes typically indicate how well a nation's economy is doing. For China, this theory does not seem to apply, and classical measures of economic growth do not seem to fit either. For many years, many foreign scholars have predicted that China's economy will collapse; thus far, that has not happened. China's economic slowdown needs some unique justifications. Consequently, the following are some points to consider.

Today, it is still too early to say that China is going to enter into an economic crisis. Nevertheless, China is arguably in an economic slowdown and its financial-sector setbacks have created huge market instability in recent months.

The key to a sustainable Chinese economy appears to rely largely on how creative and smart the government is when dealing with new economic challenges. The good thing is that the Chinese government clearly recognizes the issues and problems within the current overall economy and it is willing to address these problems in ways that ultimately satisfy markets to varying degrees.

As a result, it is fair to say, China is indeed experiencing its largest economic reorientation and restructuring to date, all during a relatively fragile global economic environment. China's manufacturing sector continues to shift from labor intensive to capital intensive -- from a factory model to one driven by innovation and creativity. This will lead to a decreasing growth rate, but the process will eventually upgrade the manufacturing industry. However, this transformation could be fairly long and painful, and, if not properly managed, it could lead to widespread panic.

The fact is that China's economy is massive. With near 1.4 billion people, it is like a gigantic ship, too big to make a turn.Turning from a GDP-driven economy to an environmentally friendly economy is not easy. This type of challenging era has arrived. However, there is still a sense of realistic confidence in China that cannot be ignored.

First, China's consumer markets will most likely keep growing. Last year, China's online sales increased more than 30 percent. The younger generation intends to be more aggressive spenders than their parents have been. Domestic consumption is growing, despite the fact that overall, China is still a big saving nation. Bank deposits continued their two digit increase in 2015.

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