Economic transition needs breathing space

Workers manufacture garment that will be exported to the European Union in Huaibei city, Anhui province, Dec 8, 2015. [Photo/IC]

China's top economic planner said on Wednesday that the country's 2015 economic growth rate was within a reasonable range.

This has created enough room for policy maneuvers to underpin its ongoing transformation towards more consumption and innovation-driven growth.

Chinese policymakers are not only well aware of the huge challenges ahead but also resolved to deal with them with the required flexibility and resolve.

The $10-trillion Chinese economy grew by 6.9 percent year-on-year in 2015, its slowest growth in a quarter of a century, thanks to sluggish property investment, falling trade and weak manufacturing activity.

Chinese policymakers are ensuring they can keep deepening structural reforms as long as growth momentum allows and have more preparation time to step on the gas when headwinds blow harder than expected.

Globally speaking, China's aim and ability to achieve steady growth will be an important anchor for the world economy teetering on the brink of a repeat of 2008.

The increasing hesitancy shown by the US Federal Reserve to continue raising interest rates to a historically normal level has already laid bare the fragility of US economic growth. Worse, it has added to fears the irresponsible US monetary policy will cause more chaos and panic across financial and commodity markets around the globe.

Domestically, Chinese policymakers have more freedom to maneuver and they are doing their best to boost consumption to take up the slack in sluggish investment and factory activity. As long as the country's economic growth is healthy, employment and price pressure will all be under proper control while the strategic shift toward services and consumption-driven growth can make progress.

Actually, the green shoots of the Chinese economy are emerging despite the global chill. While the country's closely-watched manufacturing sector remained in contraction, the Caixin-Markit services PMI came in at 52.4 in January, showing that China's service sector is expanding at its highest rate for six months. That is a real cause for optimism as the service sector accounts for an ever larger share of the Chinese economy.