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China's economy slowing down, but stable with strong basis

2014-04-17 08:15 Xinhua Web Editor: qindexing

China's latest economic data showed a signal of slowing down, but its long-term prospect is expected to be stable with strong financial circumstance and better quality labor force, an expert said.

China's economy expanded by 7.4 percent year on year in the first quarter, the lowest level since the third quarter of 2012, National Bureau of Statistics of China said Wednesday.

"China is not only one of the biggest economy in the world, but also becoming a mature economy, its growth model could last for many years and its financial market stability benefits from the owners structure." Daniel Gros, director of the Center for European Policy Studies (CEPS), told Xinhua.

While saying that the external risks such like U.S. tapering bond-purchase program to end "cheap money era", have caused many emerging economies shaky, Gros said: "Not like those emerging economies, Chinese market and economy would relatively stable as its saving rate is huge and money in the market owned mostly by domestic institution not foreign bodies."

"The Chinese capital control also guard the dangerous situation while the big difference between internal growth rate and external interstate rate," he added.

Meanwhile, the senior expert analyzed the driver forces for Chinese long-term economic growth, noting that better quality labor force, development of urbanization and improvement in technology and innovation could be key points for future growth.

He said: "The potential for economic growth depends not only, or even mainly, on the number of workers in the labor force, but on their quality. Investment in human capital plays a fundamental role as an engine of economic growth, with important spillovers beyond the pure economic sphere."

He pointed that the accumulation of human capital due to longer schooling, bringing better educated cohorts into the work force can be more important than their numbers.

Citing reports from Chinese Ministry of Education, there has been approximately 7 million new graduates entered the labor market in 2013. He noted that such data would correspond to a tertiary graduation rate of about 30 percent, given an annual cohort size of slightly above 20 million.

He also stressed the importance of implementation the urbanization for rising investment and economic growth.

"Urban growth is usually associated with overall income growth and is thus part of the growth strategy in many countries, including China." he said.

Besides considerations on improvements in the quality of life and work, in purely economic terms technological change matters enormously for the creation and distribution of wealth.

"At present advanced economies are still leaders in innovation, but this could change rapidly as the emerging economies catch up, especially in Asia. The trend towards increased R&D investment is accelerating in particular in China up to the point where it will soon provide a challenge to western supremacy." he said.

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