China's economy in 'transition': expert

Andrew Polk (standing) of The Conference Board China Center discusses China's economy during a media briefing on Oct 24 in New York. Jack Freifelder / China Daily

China's economic deceleration in the third quarter signals "ongoing deterioration" in the country's growth, said an economist.

Andrew Polk of The Conference Board China Center in Beijing said: "China is in the midst of a deep, structural transition, and part of that transition is going to be a downshift.

"Productivity performance is really what's at the heart of China's problem right now, and we can clearly see that the trends for capital, labor and productivity are all on a downward slope."

Polk made the remarks at a media briefing in New York on Oct 24.

He said drivers for Chinese growth are in a decelerating phase, and this view is starting to become a little bit more of the consensus.

"Our projection for growth this year is 7.3 percent, falling to 6.5 percent next year," he said. "That's just going to get deeper over the next five years."

Polk led a discussion of the Conference Board's economic outlook report on the Chinese market, which he co-wrote with David Hoffman, the Conference Board's vice-president and managing director in Beijing.

The Conference Board Inc is a US-based global nonprofit research group with offices also in Belgium, Canada, China, India and Singapore.

The report, The Long Soft Fall in Chinese Growth, sees the Chinese growth rate for 2015-19 falling to 5.5 percent and to 3.9 percent between 2020 and 2025.

The report also highlights four themes to watch over the next 18 months: increasing regional economic disparities, a tightening of the credit market, real estate risks, and mini-stimulus measures on monetary, fiscal and administrative policies.

China's GDP grew 7.3 percent in the third quarter, compared with 7.5 percent in the second and 7.4 in the first, data from China's National Bureau of Statistics (NBS) showed.

The 7.3 percent figure is the lowest growth figure since the first quarter of 2009.

"In general, the economy has maintained steady development momentum in the first three quarters, but the environment at home and abroad remains complex," NBS spokesman Sheng Laiyun said at an Oct 21 news conference in Beijing.

China will look to keep domestic macroeconomic policies stable, but Sheng said initiatives are still subject to tweaks and changes.

Sheng called the lower growth rate a "new normal".

Kuang Xianming, director of the Research Center for Economy at the China Institute for Reform and Development, told Xinhua in an Oct 21 interview that the country has entered an era of medium growth between 7 percent and 8 percent, which he said suits China as it pushes for reforms.

"The challenge for the Chinese economy is not about the speed, but about the structure," Kuang said. "We need to grasp the good times of medium-speed growth to realize breakthroughs in key reforms."

Polk said he is encouraged by some of what President Xi Jinping has said about GDP quality as opposed to quantity.

"One thing we try to do is bust the myth of 'Chinese exceptionalism'," Polk said. "China has the problems all emerging markets have, and it's also subject to the laws of economics just like everyone else. A slowing China slows world growth because China is such a big part of the economy. But a gradual slowdown [in China] should not hurt the Asian neighbors too much.

"In any emerging market, with China at the top of that list, you've got to marry the macroeconomic and anecdotal data," Polk said. "The rhetoric is right, but we still need to see the on-the-ground work."

jackfreifelder@chinadailyusa.com