China's annual Central Economic Work Conference was held on Dec. 12, the latest one in the past 10 years. It seemingly implies the complex situation of China's economy.
External environment's impact cannot be underestimated
China's economy faces the twin troubles of trade protectionism and declining exports against the backdrop of a severe international economic situation.
"The external environment's influence on China's economy should not be underestimated," said Xu Hongcai, Deputy Director of the Information Department of China Center for International Economic Exchanges.
As the largest and second largest exporters to China respectively, Europe and the United States will not see economic upturn in a short time of period. The two countries expand exports and drive their economic growth and employment through trade protectionism, resulting in a significant decline in external demand, which has severely impacted China's original processing trade type and export-oriented economic model.
Ba Shusong, Deputy Head of Financial Research Institute of the Development Research Center of the State Council, said the weak economic growth in Europe and the United States will be a long-term phenomenon and will have multiple impacts on China's economy. It directly affects our external demand on the one hand and directly restricts the trend, direction and space of our policy on the other hand.
Investment strength to be maintained only by structure optimization
China's internal economic situation is also worrisome in addition to the impact of external factors. Xu Hongcai has pointed out that the situations of both domestic investment and consumption are not optimistic.
Currently, the investment shows a continuous downward trend, and there is no consumption hot spot, making Chinese unwilling to spend. In addition, the economic downturn leads to a decline in people's income, resulting in the further decline of consumption.
"The economic work conference will focus on boosting investment to improve the people's lives and to encourage domestic consumption," Ba said, adding that investment, rather than exports, will help China cope with various crises and promote economic growth next year.
Xu stressed that the Chinese government should increase financial support for small and micro-sized enterprises and encourage investment in the services, creative culture, high-end manufacturing and emerging strategic industries.
This is the way to boost the growth of gross domestic product (GDP), job opportunities, income and consumption as well as to improve the demand structure. The chain reaction triggered by adjustments to the investment structure can enhance the internal driving force for economic growth.
Transforming economic model ensures steady development
Xu said to maintain steady and healthy economic growth, China should first increase domestic consumer demand, encourage enterprises to conduct independent innovation, and transform its imbalanced export- and investment-driven economic growth model into a balanced export-, investment-, and consumption-driven model.
"The next year may be a year of reforms. We will unleash our energy through policy adjustments, structural adjustments and reforms," Xu said, adding that the Chinese economy still maintains momentum for sustainable growth and is unlikely to suffer a hard landing.