Chinese economy still full of power

An employee counts yuan notes at a branch of Industrial and Commercial Bank of China Ltd in Wuxi, Jiangsu province. New yuan loan growth dropped in August due to weak demand. Xie Zhengyi / China Daily

A glass is filled halfway with water. Pessimists would say it's half empty, while optimists would say it's half full. The same is true when it comes to the Chinese economy. Quite a few pessimists have been forecasting doom and gloom since the beginning of the year. However, they have failed to see the country's resilience and the new driving forces that have emerged.

In fact, the recent moderation in China's growth is the anticipated result of reform measures and regulation. This is therefore the new normal: we are seeing slower yet better quality growth helped along by proactive and deeper reforms. Of course, China's growth rate could easily have exceeded 7 percent if the energy- and- pollution-intensive industries had been given free rein, or if massive stimulus measures had been applied.

China, however, chose not to opt for this kind of unsustainable growth－because it would come with a huge cost and would sacrifice the long-term development of China and the world.

Instead, China has chosen to focus on the following five key areas: addressing excess capacity, downsizing property inventories, expanding effective supply, helping enterprises reduce cost and guarding against financial risks. This approach, like losing weight, won't be without its discomforts or pain. But just as perseverance will see one through a diet－to less fat, stronger muscles and a healthier body－so it is with the Chinese economy.

Despite the moderation in growth, the fundamentals of the Chinese economy remain strong. While the stock and foreign exchange markets have their own patterns, the key is to look at the bigger picture. It is true that the 6.9 percent growth in 2015 was the lowest for China in 25 years. But this was achieved by an economy that is $10 trillion in size. The actual increment is equivalent to the yearly GDP of a medium-sized country and it is larger than the amount generated by double-digit growth years ago.

In other words, against the background of the sluggish world economy, China remains one of the fastest-growing major economies－and it contributes over one quarter of global growth. Consumption now accounts for two thirds of China's growth and the service sector now makes up more than half of GDP.