Touting a ‘new normal’ for China
The debate over the Chinese economy’s “new normal” is intense. On Nov. 1, state broadcaster CCTV hosted a listed-companies’ forum in Beijing, and around the same time, an emerging economies forum was held in Haikou, Hainan Province. The main agenda of both meetings was the new normal, a phrase that refers to new standards for a situation that has changed. But what standards are stirring up China? Let’s look at them in terms of economic indicators for the third quarter of 2014.
China’s GDP growth rate for the third quarter, released on Oct. 21, was 7.3 percent - its lowest in four years. Western media said that the Chinese economy fell to its worst state since the financial crisis. But China remained composed. The general response was that the growth rate was “within a reasonable range” on grounds that it is the “new normal.”
Economists explained it with employment. In China, there is demand for about 10 million new jobs to be created every year. In order to achieve this, about 10 percent growth was necessary in the past, because 1 percent growth in the GDP resulted in 1 million more jobs. But now, 1 percent growth creates 1.3 to 1.5 million jobs, thanks to the rapid growth of the service industry. In fact, China’s National Bureau of Statistics announced that China has already achieved its employment goal of creating 10 million jobs by the end of September. Last year’s growth rate was 7.7 percent, and 13 million jobs were created. The Chinese authorities explain that the new normal era has come, and that stable employment has been attained.
Chinese President Xi Jinping was the first person to mention the new normal. When he visited Henan Province in May, he said, “We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded.” It was a proclamation that he would lead the economy in new ways. The key is growth through reform. China has opened industries monopolized by state corporations to the private sector and has drastically lifted administrative regulations that suppressed the market. The new normal contains Xi’s economic management philosophy.
The new normal now goes beyond the economy. At the fourth plenary session of the 18th CPC Central Committee, the “rule of law” was described as the new normal of politics. President Xi’s foreign policy is called “new normal diplomacy.” It is hard to predict the next destination of the new normal. But it is clear that the Xi Jinping system is recreating China in every way, from politics to economics to society. The new normal is a challenge for us, too.
*The author is the director of the JoongAng Ilbo’s China Institute. JoongAng Ilbo, Nov.3, Page 30
By HAN WOO-DUK