Economic restructuring a model for the world

Tourists ride camels in the desert in the Crescent Moon Lake (Yueyaquan) and the Singing Sand Mountains scenic spot in Dunhuang city, Northwest China's Gansu province, Oct 3, 2012. [Photo/IC]

Since the global financial crisis broke out eight years ago China has contributed greatly to and played a dominant role in maintaining global growth, starting with its $586 billion package to stimulate the domestic economy in November 2008. Although China's contribution to global growth has decreased to about 30 percent now, based on various estimates, analysts say that after restructuring its economy, it will resume its major role in the global economy in the middle and long term.

China's year-on-year GDP growth dipped to 6.9 percent in 2015, the slowest in 25 years. In the first half of this year, it was 6.7 percent and the International Monetary Fund has forecast that in 2017, its economic growth could further drop to 6.2 percent.

While the global economic downturn is behind China's economic slowdown, the country's efforts to rebalance its economic structure to make it more dependent on consumption, services and high-tech industries and less reliant on resources and energy-consuming industries have also affected its growth momentum, say analysts.

China's economic restructuring may take years, but initial signs of constructive changes are evident. For example, in the first half of this year, China's service industry accounted for 54.1 percent of its GDP growth, up 1.8 percentage points year-on-year. And consumption accounted for 73.4 percent of GDP growth, up 13.2 percentage points year-on-year.

The outputs of crude steel and coal have decreased in the first half of this year as China presses ahead with the drive to reduce overcapacity. Moreover, the value added of the strategic new industries increased 11.8 percent year-on-year in the second quarter of this year, up 1.8 percentage points from the first quarter. New industries, such as online services, online education and medical services all registered faster growth than traditional sectors, indicating China has made solid headway in economic restructuring, analysts say.

As China gradually restructures its economy, it will hopefully maintain mid- to high-rate growth, which is good news for both China and the world, says Wang Xiangyu, a researcher at the Institute of Quantitative and Technical Economics of the Chinese Academy of Social Sciences. Considering that most developed economies remain trapped in weak growth, China's high-quality growth will serve as a sustainable engine for global growth, he says.

"I'm quite confident China will accomplish its restructuring agenda since it has become quite resilient now," Wang says.

In the wake of the onset of the global financial crisis that broke out in 2008, the world has been looking for the right path for economic development and seeking to accomplish economic rebalancing. The world economy's low growth has also led to political and regional instability, Wang says. If China successfully restructures its economy and finds new growth engines, then it will not only add to global growth, but also provide a "China model" for other countries as a reference for their economic growth, he adds.

Based on the current progress, China could accomplish restructuring by 2020, experts say.