Domestic market vital for growth

Exports play an important role in the Chinese economy but China cannot depend on exports to sustain its growth momentum.

Think about Germany and Japan. The foreign exchange reserves of Germany during its high-growth period of industrialization had not exceeded 5 percent of the GDP of the United States; that of Japan ranged about 0.5 percent on average during its decades of fast growth. But China's foreign exchange reserves have been equivalent to 12 percent of the US GDP since 2000.

With regard to the ratio of foreign exchange reserves to one country's GDP, neither Germany nor Japan have exceeded 5 percent in their high-growth periods, while China's foreign reserves now have already surpassed 50 percent of its GDP value. This export-geared model is no longer sustainable.