Not an easy job for China's economy
Updated: 2014-02-12 10:30
BEIJING - Good or bad? That's a question for all forecasters to answer concerning China's economic performance in 2014, as the world's second-largest economy looks to weather a bumpy start.
It won't be an easy job ahead for China, according to economists who have close ties with the country's policymakers.
"Prepare for the hard time and act frugally," warned Li Yining, a renowned Chinese economist and also a political advisor, citing downward pressure both at home and abroad.
Li's remarks carried in Tuesday's China Economic Weekly came after Chinese economic growth eased to 7.7 percent in 2013, and ahead of the publication from Wednesday of a string of key economic data.
The 2013 growth marked lukewarm momentum in China for two years in a row, given an average of almost two-digit growth for the past three decades.
In an economic performance very similar to that of 2012, China's gross domestic product totaled 56.9 trillion yuan ($9.32 trillion) in 2013, according to the National Bureau of Statistics.
However, Li called for confidence in the Chinese economy, predicting China's performance for the whole of 2014 will be a cause for optimism.
Public confidence seems to remain uncertain, as shown by leading economic indicators. China's purchasing managers' index (PMI) for the manufacturing sector dropped to a six-month low of 50.5 percent in January, while the HSBC/Markit China PMI for the month dipped to 49.5 from 50.5 in December, the first deterioration of operating conditions in China's manufacturing sector since July.
Li said the country should never stop its pursuit of the world's leading powers, and needs further endeavors to face the challenges in 2014 considering worries over the Eurozone crisis and QE tapering by the United States.
Public confidence is essential to speed up reforms this year, which can be harmed by pessimism based on unstable forecasts, according to the leading economist.
He stressed that China's sustainable modernization fuels public confidence and supports the country's entrepreneurial spirit, without which all the efforts would be in vain.
Taking public welfare as an example, Li said the system should be improved gradually and maintained at a rational level to avoid over-dependence.
Consumption cannot be the only pillar in sustaining China's economic expansion, as much of the country's population still relies on savings for healthcare, with planned social security still on the way.
Meanwhile, he said, investment ought to be encouraged in innovative industries and infrastructure, without leading to overcapacity, and private capital should become more involved in the market amid the State-owned enterprise reforms.
Wu Jinglian, another noted economist, sounded a similar note of alarm for optimists on China's economy.
Tuesday's China Securities Journal quoted Wu as saying that China will continue to face difficulties in economic development in 2014, and it is vital to fulfill the decisive role of the market in resource distribution, with this work challenged by competing vested interests.
He said priority must be given to mapping out more detailed and practical measures in line with reform guidelines to tackle systematic flaws.
The Communist Party of China unveiled an impressive blueprint to deepen reforms in November, with observers believing the drive will inject new vitality into the economy and bring "reform dividends" to the country.
They will get further clarity from Wednesday, when the government will begin releasing decisive economic data, including on imports and exports, industrial output and new lending.