Source: Xinhua | March 16, 2015 03:56:50 | Editor: huaxia
NEW YORK, March 15 (Xinhua) — U.S. experts are confident that the Chinese economy will see a slower yet more dynamic growth, with a more optimized structure and global outreach.
At the opening of the annual session of the National People’s Congress on March 5, Chinese Premier Li Keqiang set the average annual growth rate for the next five years at above 6.5 percent.
“Whatever adjustments are being made … Chinese people continue to make more money to make better jobs. They are spending on real estate, on goods, on services. It is a real pillar of the coming economy in the next five years,” said Michael Zakkour, a corporate and business strategist.
China’s economy has grown in double digits for over two decades, but as the economy get larger and multi-faceted, the economy enters an adjustment period, where shrinkage in growth number means larger aggregated value.
“China’s economy is today made up of multiple subeconomies, each more than a trillion dollars in size, some are booming, some declining,” said Gordon Orr, emeritus director for McKinsey & Co.
Experts believe that when people debate the percentage up or down, they lose sight of China’s economic scale.
As the world’s second-largest economy seeks healthier growth, a significant portion of the economy has to be based on domestic consumption, added Zakkour, author of “China’s Super Consumers” and principal of Tompkins International.
Consumption contributed 66.4 percent to China’s GDP growth in 2015, up 15.4 percentage points from 2014, according to data from the National Bureau of Statistics.
Online sales also remained strong in 2015, jumping 33.3 percent year on year to 3.88 trillion yuan. During the past Singles Day shopping holiday, Chinese e-commerce giant Alibaba completed deals of 14.23 billion U.S. dollars in one day.
A more consumption-driven Chinese economy means opportunities in service sectors, according to Virginia Kamsky, chairman and CEO of Kamsky Associates, Inc., a strategic advisory firm founded in 1980 and one of the first approved foreign advisory firms in China.
China’s economy experiences different phases of its development cycle. It is now shifting its focus to consumption and service industries from labor-intensive industries and manufacturing via complex reforms.
People will realize that in many parts of the economy, “a smaller Chinese manufacturing sector is actually a stronger global competitor than ever before,” Orr wrote in a recent article.
Meanwhile, China’s global competitiveness will be not just in manufacturing, but in major sectors in innovation, said Gail Fosler, president of the Gail Fosler Group LLC, a strategic advisory service for global business leaders and policymakers.
“Rather than manufacturing a widget and exporting it at a very competitive price, you are going to be looking at China wanting to move up the scale in terms of technology and innovation,” Kamsky said.
In addition to a more optimized economic structure, China has also been engaging globally with outward reach, which will to a large extent bring momentum to the economy.
Zakkour pointed out a significant part of the growth will be from outbound investment, with an increased focus on building Chinese multinational companies and global brands.
“One big thing I see coming up in the next five years is China going global,” he said.
Chinese firm Fosun International Limited announced last November that it had completed the acquisition of the remaining 80 percent equity interest in Ironshore Inc., an international insurance company founded in 2006.
China’s conglomerate Dalian Wanda Group Co. has agreed in January to acquire production and finance company Legendary Entertainment for 3.5 billion U.S. dollars in cash.
“We have seen these big acquisitions that are now under regulatory review, and that is just the tip of the iceberg,” said Fosler when explaining why China could shape the world’s economy for the next five years.
In his article for McKinsey & Co., Orr argued that “no matter what rate the country grows at in 2016, its share of the global economy, and of many specific sectors, will be larger than ever.”
Kamsky believes an increase in outbound investment from China will be conducive to investors that not only want to invest in China, but also with China.
With China’s solid economic performance, experts get tired of the sayings that the economy is “collapsing” or “hard landing”.
“There has been this handwringing about China being weak and collapsing, I think it is absolutely wrong. China is strong, is dynamic, China is becoming economically aggressive,” said Fosler.
Zakkour said: “I have been listening to people say that the Chinese economy is collapsing for 23 years now.”
“They are judging China’s economy only in the reflection of their own,” said Zakkour, explaining that China’s equity markets do not play the same role in the overall economy of China as that in the United States or other countries.
Kamsky agreed. “I do not think you can even begin to understand the dynamism of what is going on in China without going there. You cannot just look at numbers on the page,” she said.
“I would say that I remain cautiously optimistic that this will in fact be a good year,” she said, adding that China is extremely resourceful despite headwinds and problems.