Strong income growth
Updated: 2011-10-19 07:55
The steady slowdown of the world's second largest economy may disappoint those who are hoping it will be the driving force for the global economy, which is teetering on the edge of a double-dip recession.
Latest statistics show that the Chinese economy expanded 9.1 percent year-on-year in the third quarter of the year, the slowest pace since the third quarter of 2009.
However, remarkable income growth indicates that the Chinese economy is not losing steam. Instead, it is making needed progress in stimulating consumer-led growth.
If slower economic growth is deemed the necessary price to pay to curb runaway inflation, Chinese policymakers should be comfortable with the current effect of tightening.
The overall economy has now slowed for three consecutive quarters, easing from 9.8 percent in the fourth quarter last year to 9.7 percent in the first quarter of this year and 9.5 percent in the second quarter. Meanwhile, headline inflation is showing signs of having peaked, with the consumer price index rising 6.1 percent from a year earlier in September, down from a three-year high of 6.5 percent in July.
Though there is no guarantee that consumer inflation in the country will not rebound and moderate further, five hikes in interest rates and nine increases in the reserve requirement for banks since last October have ostensibly achieved their task of reining in overheated growth and slowing price rises.
Compared to the gloomy growth prospects of the European Union and the United States, that the Chinese economy is on track for such a "soft landing" should be reassuring.
Better, double-digit income growth figures suggest that the world's largest developing economy has managed to tilt the distribution of income a little bit during the process of macroeconomic control.
In the past three quarters, urban and rural residents' per-capita disposable income reached 16,301 yuan ($2,557), up 13.7 percent year-on-year. And the per-capita cash income of rural residents even hit 5,875 yuan, an increase of 20.7 percent.
Though, in terms of real purchasing power, inflation will surely bite off several percentage points, such double-digit nominal income growth is important.
Domestically, continuous and fast income growth is essential to the country's efforts to boost domestic consumption into a key growth engine for the coming decades.
Globally, more and wealthier Chinese consumers will play a key role in transforming the world's leading exporter into a vital source of demand, underpinning balanced global growth in the foreseeable future.
Double-digit economic growth may not return to China any time soon, but robust income growth in the world's most populous country still serves as a good cause for optimism.
(China Daily 10/19/2011 page8)