China's real economic data has been very close to the forecasted data so far this year. It is one of the closest in recent years, but perhaps also the most disappointing to many. Media around the globe have been speculating on whether China will announce the second round of a 4 trillion yuan ($635 billion) stimulus plan. Xinhua News Agency shot down that possibility Wednesday, leaving Asian stock markets mostly in red territory.
Although calls for a slowdown in China's economic growth have been heard for years, society actually is reluctant for that to really happen. There are forces trying to restore China's high-speed growth both from inside and outside the country.
Rejecting another round of stimulus doesn't negate the previous decision. It was a desperate situation at the time and staying away from the abyss that Western countries were sinking into was China's top priority. Today is different. We have survived that crisis, and the issues we are facing at present are obviously not critical.
China's economy finds itself in a more ordinary situation. Domestic issues such as low purchasing power and volatile investments are not new. Exports are as tough as before. Injecting trillions into the economy will bring less positive effects while the cons will just keep stacking up. It will be painful to China as well.
Since we have determined to change the economic growth model, we should stay committed to it. The old growth model is not sustainable and its downsides are too hard to swallow. This understanding has been proved correct by our past experiences.
A dangerous subconscious is now developing in Chinese society. It assumes the country's economic growth will remain fast, and the public's welfare, society's stability, as well as the Party's legitimacy are all tied to this.
China needs to improve the quality of its economic growth, and have sustainable energy consumption. But it should understand that no country can ever keep a high growth rate for too long. Every economic model has experienced its own form of crisis. China has no reason to be different.
A good social model mustn't only capture development opportunities, but also know how to deal with different phases.
Currently, China has the space, resources and time to be able to adapt to different climates. Its economy will maintain positive growth for some years, boosted by its urbanization and its public's pursuit of a better life. Issues may emerge temporarily, but the long-term trend is no doubt positive.