Will China accept sub-6% GDP growth?

Source:Global Times Published: 2019/12/2 23:33:40

College graduates engage in a professional skill competition on harvesting machines in farms outside Suzhou, East China's Jiangsu Province. China aims to develop 1 billion mu (67 million hectares) of high-standard farmland by 2022 with a reliable grain production capacity of 500 billion kilograms annually. Photo: VCG

Some economists forecast China's economic growth may fall below 6 percent next year. These forecasts come as the global economy sees stagnation with weak growth in some nations. 

Even if China's year-on-year growth dips below 6 percent in 2020, the country won't be the world's worst-performing major economy. GDP growth of less than 6 percent would still be within a reasonable and bearable range for the Chinese economy.

China's slowdown is a fact, but the economy is running smoothly as a whole. The Chinese government can pull the economy out of its downturn and keep the growth rate at 7 percent, assuming that a strong stimulus program is carried out. However, the Chinese government has not done so. Why? That's because the current growth rate can help China meet its goals of improving living standards while also safeguarding economic stability. This situation allows the government to focus more on economic restructuring, which in turn lays a foundation for long-term economic growth.

The outside world has always scrutinized China's GDP figures and often read too much into them. It's understandable, because many outside observers have little knowledge about the Chinese economy. They have to resort to indicators such as GDP figures to know what's happening in the world's second-largest economy. Some of those people evaluate the performance of China's economy based on rises and falls in the GDP figure, but that's a simplistic means of analysis.

As for China, GDP is being seen as a less important metric of economic performance. The nation's rapid alleviation of poverty in recent decades means there is less pressure on the country to rely on fast GDP growth to raise the incomes of poor people. Currently, China's economic concerns involve solving certain problems, such as hedging financial risks and encouraging independent innovation. 

The country faces many problems in search of solutions, but it seems the top priority of the Chinese government isn't about keeping the economic growth from slipping below 6 percent. China has repeatedly emphasized that the economy is shifting from high-speed growth to high-quality development. But unfortunately, many in the outside world don't understand the shift very well.

China has been moving in this direction and will continue on this path. However, it is undeniable that the trade war with the US adds uncertainty to the Chinese economy. China's GDP figures have been in the media spotlight, and any change in the reading will influence the public opinion war and confidence in the Chinese economy. China's GDP figures have drawn more Western attention amid the trade war, so the figures to some extent will bear more significance in 2020.

The Chinese economy has become a complex system. The wisdom of Chinese people will be tested in deciding how to strike a balance among goals such as 6 percent GDP growth and economic restructuring. China is under pressure to safeguard its economic growth, but it's unlikely to return to the old path of relying on massive stimulus.


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