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China’s economy reinventing itself

Updated: Dec 31,2015 11:28 AM

Yes, the biggest economic story of 2015 is China’s slowdown. But, it is not the whole story, China’s economy is reinventing itself. How did it happen?

How is China’s economy really doing in 2015? It’s growing slower.

For decades China’s annual economic growth averaged 10%. This has slowed since 2010, but was always above 7% until recently.

It’s caused concern.

China is the world’s second largest economy, and an important engine of global economic growth.

So here’s the question: Will China’s economic woes lead to another world economic slump?

The answer: Not likely.

China’s economy is growing slower, but it is still growing. Even growth at 6% would mean global economic growth of more than 1%.

China’s leaders have stated repeatedly they want to shift the economy, from one that depends on low-cost exports, to one with more sustainable growth that relies on the service sector, and high-end manufacturing and domestic consumption. So how has 2015 helped China reach that goal?

2015 was a good year for China, which shifted its role as a participant to a leader on the stage of world economic affairs, initiating the Belt and Road Initiative, the Asian Infrastructure Investment Bank and providing a base for the headquarters of the BRICS bank.

2015 was also the year that China introduced a number of initiatives, many that you can see on the screen here, to stimulate innovation, upgrade manufacturing, promote the Internet and deepen economic reform.

What’s more. The International Monetary Fund added the yuan to its “Special Drawing Rights” basket of currencies in 2015, a vote of confidence in the global importance of the RMB.

So, what’s next?

The year 2016 marks the start of the 13th Five-Year Plan period to 2020, when China intends to double its GDP from 2010. But challenges lie ahead for policy makers to keep reasonable growth rate and deepen reform.