Domestic demand has transformed economic growth: trade minister
China maintained rapid growth in consumption and international investment and relatively lesser declines in foreign trade in 2015, which made a "satisfactory" contribution to domestic and global economic growth, Commerce Minister Gao Hucheng said Tuesday.
The Chinese economy still enjoys a comparative advantage over other economies in terms of consumption, trade and investment, but challenges still exist amid a slowdown in the economy, analysts noted.
Consumption reached 30.1 trillion yuan ($4.61 trillion) in 2015, rising 10.7 percent from a year earlier, and accounted for 66.4 percent of China's GDP growth, up 15.4 percentage points from 2014, Gao told a briefing in Beijing.
"In other words, China has successfully transformed economic growth, from being mainly driven by investment and foreign trade to being driven by domestic demand," the minister said.
The rapid growth in consumption was largely induced by a burgeoning e-commerce sector, which saw a 31.6 percent growth in online retail sales from the previous year, according to Gao. The trend will spill over this year, he noted.
But consumption hasn't become the economy's main engine of growth, said Tian Yun, director of the Research Center of the China Society of Macroeconomics.
"Consumption is certainly a highlight of the Chinese economy, but I don't believe that China has fully made the transformation," Tian told the Global Times on Tuesday.
The current slowdown in the Chinese economy shows that consumption failed to support growth like exports and investments had done in the past, Tian said.
He added that whether consumption will maintain its rapid pace remains to be seen, because supply-side reforms, including a reduction in overcapacity, could result in some layoffs, which could have an impact on consumption.
Comparative advantage
Gao on Wednesday also said China's trade, despite sharp declines, was still "significantly" better than other major economies.
China's commodity trade levels are still the highest in the world, with trade surplus reaching $593 billion in 2015, according to Gao, adding the services trade grew by 14.6 percent.
"If we look at it that way, we indeed still have some comparative advantages over other countries," said Lin Guijun, vice president of the University of International Business and Economics in Beijing.
"But exports and imports have been declining very sharply," Lin told the Global Times on Tuesday.
In dollar terms, foreign trade fell by 8 percent in 2015, with exports declining by 2.8 percent and imports shedding 14.1 percent, according to data released in January by the General Administration of Customs.
The declines, which are significantly lower than the government's target of 6 percent growth, sparked further concerns over the Chinese economy.
Gao dismissed such concerns, saying that trade declined worldwide due to a drop in the prices of oil and commodities, as well as unexpected geopolitical events, and that China's trade declines were the smallest.
Tian said those "outside factors" did affect Chinese trade, but the "more imperative factor" was slower domestic economic growth.
The yuan's value might also have hurt foreign trade, Tian noted, adding that although the yuan had depreciated against the U.S. dollar, its effective exchange rate rose.
The minister dismissed speculations that China is intentionally devaluing the yuan to support exports, saying "large-scale depreciation" of the yuan is not conducive to either imports or exports.
Another "satisfactory" area in 2015 was international investment, according to Gao.
He said outbound foreign direct investment (FDI), not including the financial sector, reached $118.02 billion in 2015, up 14.7 percent from the previous year, and inbound FDI also grew 5.6 percent.
"Although still growing, the pace of international investment has slowed down," said Lin, adding that more measures are needed to boost investments to support the economy.
