In my previous post, I talked about China’s slowing down economy. As President Xi pushes reform and
a slows growth, analysts say that 2014 will be a turning point. With the action plan for air pollution prevention and control in September 2013, China has started to ease surpluses in production capacity and achieved tangible results. Now 22 provinces are cutting their GDP growth targets, which will affect the national economy’s growth rate.
Xu Sitao, chief representative of the Economist Group in China, argues that China has to sacrifice part of its growth to implement reform policies. He says, “Reform and growth have apparent contradictions.” He predicts that China’s growth rate for 2014 will be 7.2%, which is lower than 7.5% prediction. However, as TIME argued, slowing the pace is not bad. With the development of the service sector, China’s economy can meet higher employment needs with slower economic growth. Stephen Roach, senior fellow at Yale University, said “China’s service sector required about 30 percent more jobs per unit of GDP than manufacturing and construction.”
Xinhua ends its article by saying China’s economy is faced with weak exports, over capacity, debt risk, and spillover effects from the U.S. QE tapering. However, China hopes that the reforms can save its economy and itself.