China steers middle path of stable growth
Yang Tao says Beijing's determination to maintain stable development will mean steering the economy above a 'floor' of 7 per cent growth but below the 'ceiling' of runaway inflation
At the Politburo meeting on Tuesday, China's top leadership said the country's 7.5 per cent growth target this year would be achieved, and affirmed that the world's second-largest economy would seek to maintain steady growth.
China's economy has entered a new stage of development, with more emphasis to be put on upgrading through transformation. As Premier Li Keqiang said at a State Council forum held in July: "We must adapt to the new situation, and give consideration to the promotion of steady growth, structural adjustment and reform, so as to develop a scientific macroeconomic policy framework."
In this regard it is clear that the challenges facing China's economy must be revisited, and the country must adapt to the reality of an economic slowdown while improving its transformative capabilities.
China has a huge economy with growing labour costs and increasingly scarce important resources, so continuous rapid growth is clearly unsustainable. In common terms, China's economy has bid farewell to the adolescent period featuring leaping rates of growth, and has entered a mature period with more robust but slower development; this is the law for the stages of development. In addition, the country faces many problems related to differences in income distribution, resource availability, environmental sustainability, institutional degeneration, and so on, none of which can be easily resolved by economic growth alone.
When growth was surging, there was little urgency to resolve these contradictions, but they can't be postponed any longer. Too much reliance on "doping" to stimulate economic growth will ultimately lead to serious consequences.
Premier Li has stressed repeatedly that the main purpose of macro controls is to avoid abrupt economic fluctuations and to keep the economy running within a reasonable range. Their "lower limit" function is to maintain steady economic growth and a stable employment rate, and their "cap" is to prevent inflation.
In this regard we can see that the so-called lower limit underlines the need for coping with the slower pace of economic development. For example, the gross domestic product growth target this year is 7.5 per cent, while the average growth target for the period of the 12th five-year plan is not less than 7 per cent.