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posted on 16 March 2015

China New Normal Will Bring Positive Energy to Global Growth

Written by , GEI Associate

In my last topic, I mentioned China has to undergo a period of reform to "new normal", and it seems to be the best strategy for China economic development. But how will "China new normal" affect the world? In recent interview by Xinhua, Jean Paul Betbeze, economist at Deloitte France, gave an answer: "the effects of China's reforms would be "quite positive" for global growth".

Betbeze stated there are two main reasons for the slow down of China's economy:

  • First, slowdown of global economy affects Chinese exports. In other words, the slowdown of China economy is just a part of the current global economic situation.
  • Second, China is undergoing economic reform and structural adjustments. Thus it is normal to see economic slowdown.

He emphasized that although suffering a slowdown, China's economy still maintains a high growth level. It is doubtless a wise strategy to boost structural adjustments by sacrificing economic growth rate when growth is still strong.

He also deems that China will pay more attention to motivate consumption and domestic demand in the "new normal", where economic growth will rely on quality, environmental protection and social responsibility, which bring various business opportunities to global markets.

For example, in order to reduce environmental pollution, China has started to build cooperation with some other foreign experienced enterprises. On December 2014, China signed project intent letter with Japan-China Environmental Cooperation Support Center to support soil sanitation in eastern China. According to a relevant report, the investment in soil sanitation in 2015 will reach 30 billion Yuan, and grow to 200 billion Yuan by 2020. There is doubtless a large business opportunity here for Japanese companies.

Moreover, China has been establishing cooperative programs with lots of German companies for aged nursing service, which is also a large and growing market.

In addition, China's new normal brings more jobs in US. Based on the report, China's economic new normal may moderate the pressure on US workers from foreign competition, as a result, there will be more paying jobs for Americans and a major transformation in relations between the world's No. 1 and No. 2 economies.

Besides, industrial transfer from China to other southeast Asian countries also increases more jobs for these countries.

In the meanwhile, China will put emphasis on improving productive efficiency and product innovation, which lead higher quality to China economy. There can be winners all around if the Chinese rebalancing is handled correctly.

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