Fluctuations in third quarter economic indicators do not mean that China is suffering an economic downturn. There are no risks of an economic stall in China.

Economy is steadily shifting

According to the latest statistics released by the National Bureau of Statistics, third quarter economic indicators show that China’s economic growth rate saw a moderate drop and the structural differentiation became more obvious.

First, the third quarter economic indicators shift into 6.9 percent, which is the lowest growth rate since the global financial crisis in 2008.

Despite the shift in growth rate, China’s growth has continued to rise in a U-shape since 2013, indicating an economic rebound.

Second, indicators of people’s livelihoods remain positive. In the first three quarters, 10.66 million jobs were added, over-fulfilling the annual job target. The growth rate of residents’ per capita disposable income increased 7.7 percent.

Third, economic structural differentiation is obvious. Though exports and the increase in investments endured a drop in the first three quarters, consumption witnessed a steady growth as it contributed 58.4 percent to the growth of gross domestic product, increasing 9.3 percent from a year earlier.

Fourth, quality and efficiency of economic growth continues to improve as energy consumption per unit GDP and electricity consumption continue to drop, and air quality in Beijing, Tianjin and Hebei province and other regions is improving.

Fifth, development of innovation and entrepreneurship maintains a good momentum. According to statistics, 30,000 companies are registered every day across the nation, and the growth rate of the added value of high and new technology industries reached 10.4 percent, 4.2 percent higher than the growth rate of industries above a designated scale.

No trends in economic decline

Fluctuations in economic indicators in the first three quarters don’t indicate that China’s economy is declining. China’s economy still ranks at the top with one of the highest economic growth rates in the world.

The fluctuation is natural. Problems such as overcapacity drag down the old growth points while it takes time for new growth points, which are driven by innovation and entrepreneurship, to make stable contributions to the economy.

At the same time, macro policies and economic reforms continue to work effectively, helping to reach the annual economic growth target.

Economy growing steadily

Fluctuations in economic growth do not change the steady-growing momentum of China’s economy, illustrating no risks for an economic stall.

First, in terms of economic growth rate, fluctuations in the first three quarters are moderate as no sharp fall is recorded.

Second, macro policies, which were implemented previously to lower taxes and cut the requirement reserve ration and interest rate, are expected to take effect in the fourth quarter.

Third, innovation and entrepreneurship will serve as the new engines to drive the economy as efforts were made to further the ongoing reforms of streamlining administration and delegating power to lower-level governments.

Fourth, national strategies in some regions, such as the coordinated development of Beijing, Tianjin, and Hebei province and the Yangtze River Economic Zone, and the Silk Road Economic Belt and the 21st-Century Maritime Silk Road initiative will effectively support the economy.

Macro policies needed to promote steady and healthy economic development

In addition to further the ongoing reforms, strong fiscal policies and moderate monetary policies will be implemented.

Fiscal policies on tax cuts and public goods and services, especially public-private-partnership projects, will be carried out to reduce the burdens on enterprises and stimulate private capital.

At the same time, fiscal measures will be taken to support environment-friendly industries such as the electric vehicle industry and encourage industry upgrades in Guangdong, Jiangsu, and Zhejiang provinces.

Moderate monetary policies such as a possible further cut of the requirement reserve ratio and interest rate will also be necessary as financing problems remain among middle- and small-sized enterprises.

Pan Jiancheng

Deputy Director of China Economic Monitoring & Analysis Center at the National Bureau of Statistics