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China seeks new growth path

2014-04-25 10:15 Global Times Web Editor: qindexing

China is looking for new ways to stabilize the economy as it is facing downward pressure, and it should also invest more in the country's services sector, the chief economist at a government think tank said Thursday.

The country's economy stayed within a reasonable range in the first quarter, but it is still facing downward pressure amid its transition period, Fan Jianping, chief economist at the State Information Center, said at a press briefing in Beijing.

The government has been looking for new methods of macroeconomic management and it will no longer rely on monetary easing to stabilize the economy, Fan said. Instead, it will create growth drivers by deepening reforms, adjusting the economic structure and improving people's livelihoods.

China's GDP grew 7.4 percent year-on-year in the first quarter, down from 7.7 percent growth in the previous quarter and the weakest growth since the third quarter of 2012.

On Wednesday, Premier Li Keqiang said at a State Council executive meeting that the country will open 80 government-led projects to private investment - in areas including transportation infrastructure, and the energy and information sectors - as part of reforms to let the market play a greater role in the economy.

On April 18, the State Council, the country's cabinet, also announced the launch of major energy projects as part of an effort to restructure the country's energy sector, including nuclear power plants, and hydropower and solar power stations. This followed measures unveiled earlier this month, such as plans to -renovate run-down areas.

Though some may believe the new measures will not have an immediate effect, China's economic growth should be viewed in a new light, Fan said.

According to Fan, China's services sector, which has grown rapidly in the past two years, can create jobs even in a time of economic slowdown and therefore no major stimulus is needed as long as employment remains stable.

While the country's manufacturing sector is suffering amid overcapacity, there is room for investing in other areas such as the services sector, Fan said.

China's services sector outperformed the industrial sector for the first time in 2013, accounting for 46.1 percent of the country's GDP. And the latest data shows that the services sector accounted for 49 percent of GDP in the first quarter, 4.1 percentage points higher than the industrial sector.

The country aims to lift the sector's share of GDP growth by 4 percentage points by 2015 from the level in 2010, according to the 12th five-year plan (2011-15) for the services sector.

"Potential areas for investment in the services sector include emerging industries such as e-commerce and logistics, which not only reduce transport costs but also create jobs," Feng Fei, head of industrial economic research at the Development Research Center of the State Council, told the Global Times on Thursday.

China has seen a boom in its IT-related industries in recent years, with consumption in this area reaching 2.2 trillion yuan in 2013, up 28 percent from 2012. Consumption of information products reached 1.2 trillion yuan last year, while consumption of information services stood at 1 trillion yuan.

Alibaba Group, the parent company of online shopping platforms tmall.com and taobao.com, achieved record sales of 36 billion yuan ($5.77 billion) on Singles' Day on November 11, a shopping festival initially created by young people to celebrate their single status.

"China also has an aging society, which will create investment opportunities in the senior service industry," Feng said.

However, sustainable growth in the services sector will depend partly on government policies, such as preferential tax policies and lowering of access barriers to some sectors such as finance and transportation, Feng said.

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