Economic growth change is the 'new normal'

Two issues concerning the "new normal" state of the Chinese economy deserve special attention. First, why is a mega policy stimulus not needed? Second, what will be the driving force for structural transformation of the economy?

Three reasons explain why a large stimulus is not necessary.

Despite the slowing of the economy, unemployment is not a major concern in China today. Official statistics show the latest monthly employment rate is improving. Had GDP not grown around 7.5 percent before 2007, unemployment would have been much more serious. Now China doesn't need to create so many jobs as before, because the working-age population is shrinking, and China's industrial structure is changing from one dominated by heavy chemical and manufacturing industries to one dominated by the service sector. Labor-intensive service industries create more jobs than capital-intensive heavy industries.