The World Needs To Adapt To China’s ‘New Normal’ Growth
The time has come for foreign entrepreneurs and analysts to cease opining about China’s GDP growth, and adapt to the slowing economy and embrace the business opportunities it offers.
After 30 years of rapid expansion and China’s painstaking efforts to embrace a more suitable growth model, the economy has entered its next phase, the “new normal”, which is characterized by continued, albeit slower, better-quality growth.
China’s workforce is declining as its population ages. With rising labor costs, it is losing the competitiveness that once made it the world’s largest goods trader.
Since Y 2012, China’s services sector has surpassed the secondary industry to become the largest GDP contributor. Productivity in services is usually lower than in factories, which means that GDP growth will inevitably decelerate as the country shifts down gears from an investment-driven economy to one led by services.
No matter what the situation, there are always the naysayers, who wax lyrical about their “exact” GDP growth figures or caused worries about an impending economic crash. With the shift to the new normal, the consensus from skeptics is that there will be less opportunities under this new phase.
Conjecture will do little to help businesses or the Chinese economy.
China’s GDP was US$10.4-T in Y 2014, accounting for 13.4% of the world total. For such a huge economy, 7%, or less, generates a substantial amount of money and creates great business opportunities.
According to President Xi Jinping, in the next 5 years, China will import goods and services worth US$10-B, invest US$500-B overseas, and see 500-M trips made by Chinese visitors to foreign countries.
The most rational action for foreign investors would be to address their misadvised attitudes and start to explore the potential for cooperation in China’s burgeoning untapped sectors.
Although China’s traditional pillar industries are shrinking, robotics, new energy vehicles, computer hardware, smart devices, bullet trains, e-Commerce and courier services reported explosive growth in 1-H of Y 2015.
This is a clear sign that the world’s #2 economy is is in the midst of a critical transition period, which the world can participate in and benefit from.
Cooperation in these new areas of growth not only offers foreign investors sound investment projects but will support China in pursuing a smooth economic transition.
Xi pledges that China will stick to its opening up policies and open the “door still wider to the outside world” to “seek new growth impetus from and share new prosperity with the international community”.
The door is always open and FDI (foreign direct investment) is always welcome.
Foreign investors would be well advised to take this Golden ticket and board China’s express train of development.
By Song Miou
Paul Ebeling, Editor
HeffX-LTN
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