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People's Daily Online>>China Business

China Voice: China's development momentum sustainable

(Xinhua)

08:23, March 20, 2012

BEIJING, March 19 (Xinhua) -- China's economy will slow down, but not because of a loss of momentum.

A runner cannot sprint all the time; he must pace himself so that he can run faster later in the race. The same holds for the Chinese economy: after over three decades of virtually uninterrupted growth, it must drift toward a steady but slower pace.

China's leaders have set the country's economic growth target at 7.5 percent for 2012, a year of political transition. The move marks the first time for the target to be set below 8 percent in eight years.

The downshift, partly a result of global economic problems, shows the government's willingness to sacrifice some speed for better balance, coordination and sustainability. The self-directed slowdown will leave more room for China's economic restructuring.

The global financial crisis and its aftermath have shown China the need for an updated growth mode that - despite great improvements in productivity - is still too dependent on assembling goods for export without adding value, as well as on heavy industries that create pollution and eat up significant amounts of capital.

The transition, although an arduous task, will not be out of reach with policymakers creating concrete plans for the 12th Five-year Plan period (2011-2015).

Ample commodity supplies, an abundance of human resources, financial capability and accelerating technological innovation will ensure an upswing in the nation's economy.

More importantly, China has an emerging buying power that will make the world envious.

With a population of over 1.3 billion, China can create an astronomical domestic market that can support employment, boost growth both at home and abroad and offset the export slump.

The demand for consumption and investment will not dry up in the foreseeable future, as China's rapid urbanization and industrialization, as well as rising household incomes, will fuel both of these areas.

As the government continues to increase spending related to social security, health care, education and low-income housing, people will tend to save less and spend more.

Maintaining people's livelihoods as a fiscal priority will also ensure that the fruits of economic growth are more widely shared. In return, it will cement social stability, which has been key to China's sustainable growth.

Meanwhile, China still has a better chance of sustaining productivity growth when the gains from adopting existing technologies run out, as it already devotes a bigger share of its GDP to research and development than other countries with similar income levels.

China's long-term potential will depend on its ability to adapt quickly, make complex decisions and implement them effectively to counter any crisis. But even with challenges ahead, there is no doubt that the country will continue to make progress.

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