Full recovery needs more private investment

She Xuebin is the kind of entrepreneur China needs. His Nature Flooring Company has been pioneering "green branding", trying to build a reputation as a wood flooring company that cares about environmental sustainability. The company has expanded because of exports and domestic sales. But since the onset of the global economic crisis its exports have dropped to zero, and She now must focus exclusively on the domestic market to maintain the firm's healthy growth.

He was one of the entrepreneurs I met when I was in Guangdong this week. Nature Flooring's struggles are symptomatic of the larger transformation one can see on the ground in China, as well as in the national statistics. China's first-quarter numbers can be read both as good news and bad news. The GDP increased 6.1 percent over the previous year, which may be a strong performance in the global context but is the lowest rate for China in many years. Consumption and government spending on infrastructure (up about one-third year-on-year) led the growth. But private sector investment has been decelerating, and is not likely to grow this year.

China has a track record of reinventing itself and turning crises into opportunities. What are those opportunities this time around? In my view, one such opportunity for China's recovery is private investment, the main source of jobs in recent years and critical for sustained recovery.