Points of view
Updated: 2016-02-26 08:56
By Andrew Moody, Hu Haiyan and Yan Dongjie(China Daily Europe)
While questions swirl around the Chinese economy, there are plenty of reasons to be optimistic about its strength and resilience
Chinese Vice-President Li Yuanchao responded to recent negative financial news headlines by insisting "blind optimism" is not needed to believe the Chinese economy has a strong future.
Speaking at the World Economic Forum in Davos on Jan 21, he recognized China faces many challenges as it undergoes a "crucial shift" in its development model but said the government has a clear strategy for the future.
"China's economy still remains the main driving motor of the global economy. As China enters a new normal, it will grow more steadily and in a more diversified way," he said.
"That the economy will further prosper is not blind optimism but a prediction based on China's current situation and strengths."
The vice-president was speaking prior to the recent rally in the Chinese stock market - volatility has been a major concern for international investors - and ahead of the publication in March of the government's 13th Five-Year Plan (2016-20).
He pointed out that despite the economy slowing to 6.9 percent in 2015 - the slowest growth in 25 years - it had still added $500 billion (450 billion euros) of extra economic activity to what is now a $10 trillion economy. That's a bigger contribution than any other country and equivalent to the size of the entire South African economy.
He also said that incomes are rising in China faster than anywhere in the world, with per capita disposable income increasing 7.4 percent last year, 0.5 percentage points above the growth rate.
Despite the slowdown, more than 13 million jobs were created in urban centers, outperforming the government's own target.
The unemployment rate in 31 major cities across the country was just 5.1 percent, one of the lowest rates since the financial crisis.
Li said it was unreasonable for commentators to expect China to maintain the high growth rates of the last decade in the current global economic environment.
"The global economy is still suffering from insufficient aggregate demand and is still going through a process of deep adjustment."
He maintained China was still on course to reach its target of becoming a "moderately well-off society" by 2020, which would mean breaking out of the so-called middle income trap, which has been a pitfall for many Latin American countries.
"China has huge potential and also the perseverance, confidence and capability to maintain a steady development speed."
Stephen Roach, former chairman of Morgan Stanley Asia and senior lecturer at the Yale School of Management, insists China has the financial firepower to avert any a financial crisis.
"China's massive reservoir of foreign exchange reserves provides it with an important buffer against a classic currency and liquidity crisis," he argues.
He insists the commitment to market-based reforms should help steer it in the right direction.
"They are a far cry from the crisis that many believe is now at hand."
In this week's issue we examine 10 of the key strengths of the Chinese economy'sc from its ability to rebalance and its highly educated workforce to the strength of its burgeoning private sector.
We also look at five areas of potential weakness, including the recent volatility of the stock market to concerns about a housing bubble and the value of the yuan.
Contact the writers through email@example.com