Editor's note: John Ross is a senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China. The article reflects the author's opinion, and not necessarily the views of CGTN.
Chinese Premier Li Keqiang set the GDP growth target for 2019 at between 6 and 6.5 percent, lower than the 6.6 percent last year and the lowest in almost three decades. Besides, with mounting uncertainties in the international economic landscape, there are fears about China's economic slowdown, and even about the possibility of China getting into a middle income trap.
Nevertheless, in its latest World Economic Outlook report on April 9, the International Monetary Fund raised China's economic growth outlook to 6.3 percent from 6.2 percent it had forecast in January, showing the international community's confidence over China's economic potential.
How should we perceive the Chinese economy? John Ross explains why he thinks China's economy is headed in a good direction.
CGTN: China has set 2019 GDP growth target between 6 and 6.5 percent, sparking discussion about an economic slowdown. Do you think these fears are valid?
Ross: I think the new Chinese target will be good. I mean, it's got to be achieved. The economy slowed down at the end of last year, but the new statistics, which came out for the first part of this year, the Purchasing Managers' Index, is good. So I think it would be possible.
The difficulty will be that the world economy will slow down this year. The U.S. economy is slowing down much more than the Chinese economy. If you take the U.S. method of calculating the GDP in the second quarter of 2018, the U.S. economy grew at 4.2 percent. In the last quarter of 2018, it grew by only 2.2 percent. That means that the U.S. economy has slowed down by almost half during a period of about six months.
And my estimate would be that when the new GDP for the U.S. for the first quarter of 2019 comes out, it will show even slower growth. Also, the euro economy is not doing very well at the moment.
So I think China will achieve the target, but the international situation is not very good. In 2018, the international economy helped China. I think in 2019 the international economy will make problems for China.
CGTN: In recent years, China has been pursuing high-quality development, while trying to shift to a consumption-driven economy from a manufacturing-driven one. How do you see this impacting future growth?
Ross: I think it's important that you have to understand what high quality is measured by, because some goals are slightly contradictory. The area in which China has made very great progress is the environment. There's no doubt that the rapid growth of China in the last decades did a lot of damage to the environment. This is a big progress that has been made.
If you look at, technically, for example, the energy used per unit of GDP has fallen by three percent a year. This is remarkable. I mean, I've got very good friends who are experts on the environment. And they think that China is leading from the point of view of the situation in the world economy. Or if you look at it more popularly, three years ago, most of the smoggy polluted cities in the world were in China. Now China doesn't have one city in the top ten. Unfortunately, there is India.
However, there is still a long way to go for China. I'm not trying to pretend the situation is perfect at all. But China has made very big progress on these types of questions. It also got to maintain productivity. But I think the one thing that should mostly be emphasized is obviously environmental protection. I think a lot of progress has been made.
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