Business / Economy

China's economy steps into 'new normal', no turning back

(Xinhua) Updated: 2015-04-17 09:30

BEIJING - While the growth rate for the first quarter of 2015 was the slowest since 2009, a closer look at the data shows that China is on track for a "new normal" in economic development, featuring slower but higher quality growth.

First quarter's growth declined to 7 percent from the previous quarter's 7.3 percent, the weakest performance since the global financial crisis, when growth fell to 6.1 percent in the first quarter of 2009.

Some doomsayers forget that much of the decline has been self-imposed as the country tries to steer the economy to more sustainable growth driven by domestic consumption, the service sector and, most importantly, innovation.

There used to be an "old normal" during the 35 years between 1978 and 2013, when annual growth of the Chinese economy averaged close to 10 percent. Between 2003 and 2007, it was over 11.5 percent.

However, the good old days cannot last forever. Growth decelerated to 7.7 percent in 2012 and 2013 and to 7.3 in 2014.

Even if the old normal could continue, it is not desirable, as three decades of almost uninterrupted double-digit growth came at the high price of air pollution and exploitation of natural resources.

The Chinese economy has embarked on a new track featuring a shift from high-speed growth to medium-high growth, a shift from quantity and speed to quality and efficiency, and a shift to an innovation-driven growth model.

The first-quarter data is filled with signs that this transition is taking place and a new growth mode is coming into form.

Energy consumption per unit of GDP continued to fall, marking a drop of 5.6 percent in the first quarter after last year's 4.8 percent decline.

The service sector, which grew much faster than the industrial sector and the economy as a whole, accounted for 51.6 percent of GDP in Q1, up from 48.2 percent in 2014 and 46.9 percent in 2013.

Thanks to efforts to cut red tape, simplify administrative procedures and cultivate new growth engines, newly registered companies mushroomed and high-tech industries blossomed.

The number of newly registered companies surged 38.4 percent from January to March, while new energy automobiles and robotics saw industrial output gain more than 50 percent during the same period.

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