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Analysts optimistic about China's economic growth

Updated: 2014-01-23 09:50
( Xinhua)

BEIJING - Foreign analysts have expressed optimism about China's economic growth in the near future, after data suggested that the national economy succeeded in averting "hard landing" risks in 2013.

The Chinese economy grew 7.7 percent in 2013, avoiding "hard landing" risks and demonstrating China's determination of economic restructuring.

Interpreting the growth figure, which exceeded the government target of 7.5 percent, overseas analysts believed that the driving force of the Chinese economy has changed.

Although the growth is the lowest in the past 14 years, Reuters analyzed, "To be sure, the gentle fall-off in growth is welcomed by most experts as a must-have in China as it transits to better-quality development."

"China's leadership has recognized that China needs to change its growth model," said former World Bank President Robert Zoellick, "It won't be a Big Bang process. We'll see, in Chinese fashion, a series of steps, which if successful, will pick up momentum."

Ryan Rutkowski, a researcher with the Washington-based Peterson Institute for International Economics, said the 7.7-percent growth is a positive signal. The fact that China's service sector outperformed industry for the first time in 2013 showed the achievements of economic readjustment, he told Xinhua.

According to statistics, China's service sector accounted for 46.1 percent of the country's gross domestic product (GDP) in 2013, outstripping the industrial sector for the first time, which indicates China's economy and society have entered a new phase.

With the development of the service sector, China's economy could meet more employment need with slower economic growth, as its service sector requires about 30 percent more jobs per unit of the GDP than do manufacturing and construction, said Stephen Roach, senior fellow at Yale University's Jackson Institute for Global Affairs.

Besides the change of weights of the sectors in the national economy, the three major engines of the economy - investment, consumption and exports - have also been changing.

Though investment contributed 54 percent of China's economic growth last year, still exceeding the share of consumption, it is worth noting that the growth of investment in fixed assets dropped to 19.6 percent. Its growth rate fell below 20 percent for the first time during the past 10 years.

The contribution of exports shrank 4.4 percent last year.

The New York Times reported that the overall Chinese economy has been cooling over the past two years, which could be seen from factory output and investment in fixed assets.

"But retail sales, which give a sense of how spending among China's 1.3 billion inhabitants is holding up, have remained relatively firm," the report said.

Looking into the future, overseas analysts are generally optimistic. Some of them see opportunities for China in recovery of developed economies, particularly the United States.

However, Rutkowski of the Peterson Institute was concerned about China's credit growth. He said "growth needs to slow further in 2014 to tame credit growth and housing investment."

"In addition, the central government should act on structural reforms to increase the returns from growth and diversify away from housing and infrastructure investment," he suggested.