Premier's blueprint for Chinese economy emphasizes reforms

ChinesePremierLiKeqiang'srecentlypublishedarticleonChina'sreformdriveandinternationalcooperationshowsthecountry'spragmatismanddetermination,andchartsanewandunprecedentedblueprintthatwillalsobenefitworldeconomicgrowth.

Li'sarticletitled"China'seconomicblueprint",whichwaspublishedintheEconomistmagazineonNov.2,depictsthedirectionandkeypointsofChina'sreformsaswellasprospectsandpathsofinternationalcooperation.

Inthearticle,LisenttheworldaclearmessagethatthecriteriontheChineseGovernmentusestoassessitseconomicperformancehasalteredfromquantitativeexpansiontoqualityimprovementandefficiencyincrease.

IndianPrimeMinisterNarendraModitoldLiwhiletheymetinKualaLumpur,MalaysiaonSaturdaythathewasimpressedbythearticle,highlycommentingonLi'sphilosophyoneconomicdevelopment.

Liacknowledgedinthearticlethatoneby-productofstructuralreform,whichtheChineseGovernmentiscurrentlyundertaking,isafallintherelevanceofindicatorssuchaspowerconsumption,rail-cargovolumeandnewbankcreditingaugingeconomicperformance.

ThethreeindicatorsLimentionedarecomponentsofwhathasbeenknownas"KeqiangIndex",atermfirstdevisedbytheEconomistbasedonthemethodLihadusedtoevaluatelocaleconomywhenhewassecretaryoftheCommunistPartyofChinaLiaoningProvincialCommitteefrom2004to2007.Inthisnewarticle,Lielaboratedonthesameindicatorswithevolvedviewpointssoastokeeppacewiththetimes.

NotingthatLihighlightedemployment,incomelevelsandtheenvironmentasprioritiesforthegovernment,analystscalledtheseindicators"newKeqiangindex",whichisapparentlybetterinlinewiththenewnormaloftheChineseeconomy.

ForGuoShengxiang,deanoftheAustralianthinktankAcademyofAPECCreativeFinance,the"newKeqiangindex"actuallyexhibitsanemphasisoneconomicefficiency,indicatingthatpoliciesareadvancingwiththetimesandmaintainguidance.

Withtheserviceindustryexpandingtoaccountforhalfofthecountry'sgrossdomesticproductionandconsumptioncontributingto60percentofeconomicgrowth,theoldassessmentcriteriaarelessrelevanttoeconomicgrowth,thuscannolongerpreciselyreflectthenewnormaloftheChineseeconomy,Guosaid.

Amidasluggishrecoveryoftheworldeconomy,Chinahasbeenfacingthepressureofasignificanteconomicslowdown.However,thecountryhasrefrainedfromopeningthesluiceforliquidity,whichwillpullitbacktotheoutdatedextensivegrowthpattern,butopted,instead,foranewsustainabledevelopmentpathfocusingonencouragingdomesticdemandandinnovation.

ThispolicyoptionisclearlypresentedinLi'sarticle,inwhichhewrote,"Whatiscalledforisnottemporaryfixes:mygovernmenthasresistedthetemptationsofquantitativeeasingandcompetitivecurrencydevaluation.

Insteadwechoosestructuralreform."AccompanyingthealterationofindicatorsistheaccelerationofChina'seconomicgrowthengine.Ledbythe"InternetPlus"initiative,awaveofinnovationisplayingagreatroleinrebuildingtheChineseeconomy,speedingupthegrowthofnewindustries,upgradingtraditionalonesandcreatingnumerousbusinessopportunities.

Evidently,asnoreformcomeswithoutpains,itwillalwayssacrificeshort-termgrowth,andgiverisetoimbalanceanddiscrepanciesamongindustries,leadingtotheslowdownofcertaineconomicindicators.Inthelongrun,however,thisisnotabadthingbecauseitshows,onthecontrary,thatstructuraladjustmentshaveyieldedpositiveresults.ItisjustlikewhatLisaid,"Yetthistransitionfrom'biggerisbetter'to'lessismore'isagoodthing.

Iwouldotherwiseworrywhetherthereformswereworkingasintended."Li'sconfidenceisoriginatedfromChina'shugeeconomicvolume,thegovernment'sabilitytomanagethewholesituation,thestrongconsensusonreformwithintheChinesesociety,theimmenseattractivenessoftheChinesemarket,andthehugepotentialingreatintegrationofresourcesandessentialfactorsofproductionbothathomeandfromabroad.

"Onindustrializationandurbanization,weofferpartnershipsinindustrial-capacitycooperation.CombiningChina'sprowesswiththecutting-edgetechnologiesofthedevelopedeconomies,wecan,together,supplygoodequipmentatgoodpricestothedevelopingworld,sustainingrobustgrowthwithsupply-sideinnovation,"Liwroteinthearticle.

TheblueprintLichartedinhisarticleisnotexclusivelyownedbythe1.3billionChinesepeople.Rather,itwillalsobenefitpeopleintherestoftheworldandprovidenewandlastingdrivingforcefortherecoveryoftheworldeconomy.