'New normal' needs an innovative push

Fourth, commodity exports will give way to capital exports. China's foreign trade has for long enjoyed a double surplus, which is not sustainable and carries huge risks in the international market. So China has to import more resource and strategic products, and consumer goods. Possibly becoming a net capital exporter in the near future, China will see massive outflows of capital that will expand its global resources, giving it a much stronger edge in reshaping global industrial chains, as well as supply and value chains.

Fifth, the middle-income group will become the main consumers at home. China will have about 600 million middle-income people by 2020, and their total spending will be thrice as much as in 2010. This, along with rising farmers' income, will facilitate the simultaneous growth of China's consumption demand and purchasing power in the global market.

And sixth, small and medium-sized enterprises and new industries may become China's new growth engines. And new industries such as e-commerce, information technology and warehouse-logistics could bring about major changes in the traditional patterns of competition, organizational forms and business models.

History tells us that every global financial crisis has ended with the reshaping of the world economic structure, which this time may be to the liking of China. But China should be wary of the risks and uncertainties - such as local government financial debts, shadow banking, high debt-equity ratios of enterprises and overcapacity - which accompany the transition from the old to a new mode of economic growth. To preempt them, China needs to use innovative ideas to improve its macro-control measures and thus ensure that its economy has a "soft landing" and can grow steadily in the future.

The author is a researcher at the China Center for International Economic Exchanges.

Courtesy: chinacusfocus.com