No need to worry about the Chinese economy, it's on the right track

Editor's note: China's GDP growth rate was 6.5 percent in the third quarter of this year, lower than the 6.8 percent in the first two quarters, and some people have expressed worries about the state of the Chinese economy. Yan Se, vice director of Institute of Economic Policy Research at Peking University, comments:

Some worry China might fall into the so-called middle income trap. That worry is unnecessary.

From 1979 to 2010, the average annual GDP growth rate of China was as high as 10 percent, 7 percentage points higher than the world's average. However, during that period, China's economic growth was mainly driven by its labor dividend, so it stayed relatively low in the global value chain.

Such a growth mode is unsustainable in the long run because of demographic changes and the damage caused to the ecological environment. Since the early 2010s, China's economic growth rate has slowed, but the main drivers are now efficiency and domestic consumption.

Given this, what China needs to do is to effectively expand domestic consumption to balance the lower growth rate, adjust the economic structure to promote quality growth and deepen reform so more people enjoy the fruits of development.

In the coming 20 years, an estimated 150 million college graduates will enter the job market in China, which not only means more better educated workers, but also a strong consumption force. With such a big educated labor force, as well as more investments in research and development, China is undergoing a new round of technological upgrading and shifting toward an innovation-driven development mode. Besides, the open minds of people with higher education backgrounds will also make it easier to deepen reform and continue the economic restructuring process.

But among all its advantages, the most important one is China has political stability. The central leadership has long stressed its firm determination to advance reform and opening-up. In the coming five years, it is necessary to implement the spirit of the 19th National Congress of the Communist Party of China and let the market play a decisive role in allocating resources.

China's economy is on a healthy track and there is no reason to worry.