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UPDATED: November 7, 2013 NO. 43 OCTOBER 24, 2013
Is the Current Rebound Sustainable?
China's economy faces the twin challenges of realizing efficiency and achieving strong growth momentum
By Lan Xinzhen

In terms of production, heavy industry products like steel, coke and plate glass rose rapidly; in terms of investment, infrastructure investment kept speeding up. The economy is once again driven by heavy chemical industries, guided by government investment and powered by state-owned enterprises.

Li said the focus would still be on economic restructuring, transformation and carrying out reforms to accomplish such ends. The main current contradictions are low-quality development and low economic efficiency rather than a slower growth rate. China has to shift away from an old development model dependent on low labor costs, exports and investment. Overcapacity and overinvestment are common plagues across the country, indicating an urgent need for a new development model.

"China should fixate not on the figures but on restructuring and upgrading to promote quality and efficient economic development," said Li.

China's economic restructuring has brought great opportunities for foreign investors. While Chinese enterprises are still trying their utmost to adapt to the changes in China's economy, foreign investors have seized the market.

High achiever

According to a report from the State Information Center, policies to stabilize economic growth will have an overall positive effect on the count despite slower economic growth. GDP growth in the fourth quarter as well as for the whole year is predicted to stand at 7.6 percent. The inflation rate will rise moderately and unemployment will stabilize.

Consumption will maintain stable growth in the fourth quarter. Since expanding domestic demand is a focus of economic restructuring, the Chinese Government will foster new growth points, such as expanding broadband Internet access across the country—including in remote and rural areas—and develop industries that are green focused.

What's more, over 20 cities have raised minimum wage standards by roughly 20 percent, which will substantially enhance the purchasing power of low-income groups.

The same trend will take place in regards to foreign trade. Since the U.S. economy appears to be on its way up, the Federal Reserve has decided to gradually reduce its quantitative easing program. The European Union has seen a turnaround. So has Japan.

China is enthusiastically advancing the establishment of free trade zones in order to create a propitious environment. Given that an array of policies was launched in the second half of the year, foreign trade will likely expand. It has been calculated that exports will grow by 7.5 percent in the fourth quarter and 8.5 percent for the whole year. The country's foreign trade surplus in 2013 will reach $260 billion, up 16 percent year on year.

Consumer prices will rally moderately. Floods in north China and high temperatures across the country during the past summer may make grain prices fluctuate. Because of restructuring, the Central Government will squeeze fixed-asset investment. According to calculations, industrial production will increase by 9.7 percent in the fourth quarter and 9.6 percent for the whole year.

"Though the rebound may be slowing down, it will last until the fourth quarter," said Niu with the State Information Center. "In the future, the economy will grow more stably."

Email us at: lanxinzhen@bjreview.com

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