ISPI study explores China’s economic growth and heading to “New Normal”

As downward pressures on the Chinese economy are intensifying, President Xi Jinping said the nation needs to adapt to a “New Normal” in the pace of economic growth, with the aim of shifting focus from the speed to the quality of growth. The Chinese economy can no longer postpone facing and solving a series of structural imbalances. Rebalancing the drivers of growth to change the structure of the economy will require deep economic and institutional reforms.
The author points out that Chinese expansion over the last three decades in fact relied on a set of imbalances – macroeconomic (the excess of investment and credit made the economy vulnerable), demographic (a workforce that is going to shrink) and the regional divide.
The main ingredients of structural change in China are increasing agricultural productivity through the mechanization of sowing and harvesting, progressive urbanization that allows millions of rural workers to move from agriculture to manufacturing and services and find better-paid jobs in urban areas, investment in infrastructure and the introduction of advanced production technology in manufacturing.