China's economic growth slows to steadier pace

BEIJING - China's economy is no longer expanding at a dazzling speed of above 8 percent, but it could offer global investors far better opportunities as Beijing toughs out the slowdown with steady reform measures.

Monday's economic data, including annual growth of 7.5 percent in the third quarter, down from 7.7 percent in the first three months of the year, signal a natural slowdown as a result of ongoing structural reforms.

They are a healthy reminder that the halcyon days of double-digit growth fueled by strong exports and lavish investment are over, and China is moving toward a sustainable growth model that relies more on domestic consumption.

Falling exports, as shown in last week's trade data, are forcing the new Chinese leadership to take proactive steps to unleash domestic demand and press ahead with market-oriented reforms and opening-up.

They are cracking down on corruption, supporting business by cutting red tape, giving banks more flexibility to offer market-based interest rates and encouraging urbanization.

They are also reining in excessive lending to prevent the world's second largest economy from overheating, a by-product of the past hypergrowth.

The credit crunch in June, which caught global attention, attests to Beijing's firm resolve to curb financial and real estate bubbles.

China has now entered a new phase of development that is different from the past decades. The transition to a more sustainable growth model can not be achieved overnight and without pain.

Finance Minister Lou Jiwei has warned in Washington that structural reforms are painful. "It is impossible to adjust structures if you still want to feel very comfortable and maintain a very high growth rate," he said.

Chinese President Xi Jinping, who has been adamant in fighting a war on graft, told a party conference in late June to shed the GDP obsession and not to judge local government officials by their GDP record alone, but by achievements in improving people's livelihoods, social development and environmental quality.

It would be hasty and short-sighted to over-react to the slowdown of the Chinese economy.

In fact, the second-quarter GDP growth rate does not fall below the official target for the whole year at 7.5 percent, nor does it seem to miss the longer-term target of doubling China's 2010 GDP by 2020.

China is at a development stage that has huge potential for economic growth. Rather than signalling economic trouble, the slowdown is paving way for reforms that will unlock China's potential.