Chinese president says risks to economy 'not that scary'

(Xinhua) Updated: 2014-11-09 09:30

BEIJING - President Xi Jinping on Sunday shrugged off worries over the risks Chinese economy is facing, saying that the risks are "not that scary."

"Indeed there are risks (in the Chinese economy), but not that scary," Xi told the Asia-Pacific Economic Cooperation (APEC) CEO Summit in a keynote speech.

Addressing worries that the Chinese economy may further decline in growth rate, Xi said "China's economic growth has become more stable and been driven by more diverse forces."

"Resilience best equips the Chinese economy against risks... And given the strategies and policy options at our disposal, we have the confidence and capability to cope with potential risks," he said.

Xi said China has adopted innovative ideas and approaches in macroeconomic management, and is advancing the new type of industrialization, IT application, urbanization and agricultural modernization in a coordinated way.

These measures will help relieve the "growing pains," he said, adding that the Chinese economy is driven more by domestic consumer demands, thus steering clear of external risks from over reliance on export.

China's economic growth slowed to a five-year low of 7.3 percent in the third quarter, down from 7.5 percent in the April-June period, suggesting slowing momentum in the economy and fueling concerns that China may miss the annual growth target of around 7.5 percent.

But Xi downplayed such concerns by pointing to economic increment China has registered in recent years.

"After over 30 years of rapid growth, the size of China's economy is nothing like what it was. The increment in 2013 alone is equivalent to the annual economic aggregate of 1994 and big enough to rank as the 17th in the world," he said.

Even a growth rate of around 7 percent would place the Chinese economy among the top in the world in both speed and increment, Xi said, adding that all major economic indicators of the country are "within the reasonable range."

Chinese authorities have for some time indicated that lower growth is the "new normal" as policy makers carry out long-awaited economic reforms and adjust from an economic growth model reliant on investment to one supported by consumption and higher productivity, which in the short run will weaken growth performance.

According to Xi, the "new normal" of China's economy has emerged with several notable features.

China's economic growth has slowed down from the previous high speed to a medium-to-high speed, and the economy is increasingly driven by innovation instead of input and investment, Xi said.

In the first three quarters of 2014, final consumption in China overtook investment by contributing 48.5 percent to the country's economic growth. The value added of the service industry, now accounting for 46.7 percent of China's GDP, continued to surpass that of the secondary industry, whereas the energy consumption per unit GDP has dropped 4.6 percent.

Xi noted that the service sector and consumption demand are becoming the main driver of the Chinese economy and that urban-rural and regional disparities are narrowing.

"... the Chinese economy is undergoing profound structural changes and (is) improving in quality and structure," he said, adding that the new normal will bring new development opportunities to China.

Meanwhile, Xi noted that the Chinese government has also streamlined administration and delegated power, further unleashing market vitality.

"Simply put, we have lifted restrictions on the 'invisible hand' of the market and ensure the proper role of the 'visible hand' of the government," he said.

But he cautioned that the new normal is accompanied by new challenges and new problems.

"In fact, some risks have already emerged," Xi said, adding that to adapt itself to the new normal, China's solution is to comprehensively deepen reform.

China came up with a grand reform blueprint involving more than 300 major measures in 15 areas in November last year.

"These reform measures are being implemented orderly," Xi said. "An arrow shot can not be reversed. We will advance reforms with firm resolve."

When explaining the major targets of China's reforms, the president said the reform aims to stimulate market vitality, boost innovation, advance opening-up, improve people's life and promote social equity.

He promised to effectively delegate power, foster an enabling environment and clarify rules to release the strength of business.

Through reforms it is important for the government to better fulfill its role and shift from an administrator to a service provider, he said.

The president also noted that China will support innovation-driven businesses and vibrant small and medium-sized enterprises, continue opening its market, including the capital market and adopt proactive employment policies.