Slowing China remains engine of global economy

A technician inspects the surface of a stainless steel component at a factory of Shanxi-based Taiyuan Iron and Steel (Group) Co, which is staking its future on research and development efforts. Provided to China Daily

BEIJING - China's economy is no longer growing at the dazzling speed it used to, but it could offer global investors far better opportunities as it focuses on restructuring and defusing possible threats to sustainability.

After a rebound in the first two quarters of this year, key indicators, including industrial output, investment, retail sales and new loans, all grew less than forecast in July, sending jitters across the world markets.

The anxiety is understandable, given the role it has played in the world economy. Contributing to one-third of global growth, any faltering will ripple throughout the world.

Yet it would be hasty and short-sighted to over-react to the softer momentum.

Looking deeper, one should be clear that a desired transition is underway - the economy is shifting from high-speed growth to medium-high pace growth, while optimizing structure and changing the growth model from the unsustainable export- and investment-driven pattern to one that draws strength from consumption, the service sector and innovation.

Consumption, which contributed to 63.4 percent of the first-half economic growth, expanded 10.4 percent in H1, accelerating marginally from the same period of 2016 and the first quarter this year.

Continuously expanding domestic demand will become an increasingly important source of export-led growth for China's major trade partners, provided that those countries grant open access to the growing Chinese markets.

The service sector, already accounting for 54.1 percent of the economy, maintained strong growth in the first half. High-tech and equipment manufacturing industries expanded faster than the overall industrial output.

Instead of erecting trade and investment barriers, China has been striving to open up wider, which means global investors could have more opportunities in the market even its growth slows. In the latest move, China announced Wednesday a series of measures to attract foreign investment, including easier access and better protection of intellectual property rights.

Sure growth will linger in the lower track, at least for the near future. Restructuring will continue pace, but it takes time for the new economic drivers to take up the slack from the weakening old ones.

Despite the restructuring pains, the economy is also under stress from ongoing campaigns - ranging from cutting excess capacity, containing leverage and asset bubbles to shutting polluting factories, as the government attempts to sacrifice short-term growth for longer-term development.

The challenge lies in striking a balance between stabilizing growth and advancing in these fronts, which the government has been managing well.

Although growth may slow in the second half, the slowdown will be gradual and will not threaten China's ability to fulfill the 2017 target of around 6.5 percent. Even if an extreme case occurs, policy makers have ample room to boost activity and avoid a drastic decline.

Expressing their confidence in the economy, international financial heavyweights have raised their forecasts for its growth.

As the global recovery still moves in fits and starts, a more sustainable, albeit slower China will remain the world's major growth engine.