Opening new sectors to private investment will support consumption

Editor's note: This year's economic expansion is widely expected to be the slowest in many years, and the central leadership envisions a "new normal" for the pace GDP growth and its structure going forward. What will unfold in 2015 - sustained, rapid expansion or an orderly transition to slower growth? China Daily asked a group of economists and analysts on their expectations for the economy in 2015.

CATHERINE L.MANN, CHIEF ECONOMIST AT THE ORGANIZATION FOR?ECONOMIC COOPERATION AND DEVELOPMENT

What is the most likely outcome for China's economy next year-sustained, rapid expansion or an orderly transition to slower growth?

The Chinese government envisages an orderly transition to a "new normal" rate of growth, which would be somewhat more moderate by Chinese standards but still high in international terms. In our latest OECD Economic Outlook, published in November, we forecast 7.1 percent growth for 2015 and 6.9 percent for 2016.

What is the most important indicator that observers should use when judging whether a transition has taken place? How can China achieve the goal implied by that indicator?

One indicator is the ratio of consumption to GDP. A significant increase in that indicator would signal rebalancing toward a more stable growth path, since consumption-driven economies are less prone to boom-bust cycles than investment-driven ones. Extending China's social safety net further will help in this regard.

What is the biggest concern for the Chinese economy in 2015? How can China address that concern?

A major concern is a sharp slowdown. A correction is underway in the property sector and to a lesser extent in industries with excess capacity. The authorities are trying to rein in shadow banking. The challenge is to maintain sufficient momentum to reduce imbalances while avoiding abrupt adjustments that might trigger a crisis.

What is the most resilient part of China's economy? How can China best utilize its strengths in this area?

While demand has played an increasing role in recent years, exports remain an important driver of growth and will benefit from the revival of the US economy. Opening new sectors to private investment, in particular in services, would support domestic consumption, including e-commerce.