Last year, China’s economic growth decreased to 7.4 per cent, and in this quarter, came down to 7 per cent. Those accustomed to China’s rapid growth over years may ask: How should one look at the slowdown in China’s economic growth?
First, China’s economy is progressing steadily. It is still one of the fastest growing among the world’s major economies. China’s economy has crossed the $10-trillion threshold and is ranked second in the world. With the base figures increased, long-term high-speed economic growth has become unrealistic.
Second, we cannot judge an economy only on the basis of its growth. We have to consider factors such as whether the overall quality and structure of the economy has improved. In the first quarter of this year, China’s industrial and income distribution structure, energy efficiency and other aspects have seen positive changes. The share of the tertiary industry improved to 51.6 per cent in the first quarter, compared to 48.2 per cent in 2014; high-tech industries grew by 11.4 per cent; new energy vehicles increased by more than 50 per cent. The difference between urban and rural incomes was 2.61 times, 0.05 times smaller than last year. Energy consumption per unit of GDP fell by 5.6 per cent. Overall, China’s economy is developing smoothly and the quality of development is improving.
The size of the Chinese economy has also increased dramatically. Even 7 per cent growth amounts to $700 billion, which is equal to 11 per cent growth in 2010 and equivalent to a medium-sized country’s GDP. China’s economy can no longer go along the old path of high input, consumption and pollution. The slowdown is a result of proactive measures taken by the government to regulate the economy, which shows China’s economy has entered the state of a “new normal”. The gear of economic growth is shifting from high speed to medium-to-high, the growth model is transiting from investment-driven to innovation-driven and development is moving from low-to-medium to medium-to-high.
There is sufficient momentum for China’s future growth. As pointed out by Premier Li Keqiang recently, “We have enough tools in our ‘toolbox’.” Comprehensively deepening reforms, streamlining administration and delegating power, promoting scientific and technological innovation and stimulating market vitality will together provide new impetus for economic development. China has carried out various reforms. Although growth has slowed, the economic environment is becoming more dynamic. Statistics show a 38.4 per cent increase in the number of new enterprises this quarter. More private enterprises have achieved success through technological innovation and a pioneering spirit.
On April 23, Chinese company Xiaomi held the global launch of its latest mobile phone in New Delhi. The event drew great public attention. I learnt from Lei Jun, the CEO of Xiaomi, that Xiaomi entered the Indian market last July and sold more than one million handsets in its first five months in India. It is now planning to establish a data centre in India this June. Xiaomi’s output value reached 74.3bn RMB within only four years of starting from scratch. In China, there are many such successful companies, such as Huawei, ZTE, Alibaba, Lenovo, etc. They have become an important driving force of the Chinese economy. In addition, more and more small, medium and micro-enterprises are contributing to economic growth. Lots of people in Jiangsu Province, my hometown, set up online stores. Now there are more than six million online stores on Taobao, an e-commerce platform.
In order to achieve common development, China has proposed the “Belt and Road” initiatives to link Asian, European and African economies, push policy coordination, road connectivity, unimpeded trade, monetary circulation and mutual understanding between peoples. The initiatives will promote not only the healthy development of the Chinese economy but also that of the entire region.
As major developing countries, there is great potential for cooperation between China and India. Last September, President Xi Jinping visited India and announced that China would invest $20bn in the next five years. This month, PM Narendra Modi will visit China. Both sides are preparing a series of cooperative projects and if a consensus is reached, the agreements could be worth $10bn. Cooperation between China and India in railway and industrial parks is also in full swing. As long as China and India join hands, they will definitely complement each other as the “twin engines” of Asia’s economy, jointly promote sustainable economic development and hasten the arrival of the “Asian Century”.
The writer is the ambassador of the People’s Republic of China to India.