BEIJING, Dec. 31 (Xinhuanet) -- China's economy will be confronted with both opportunities and challenges in the year 2013, as the global economic situation is still full of variables.
Experts said that China should catch the strategic opportunity of transforming its growth pattern through expanding domestic demand, improving innovative capability and speeding up industrial upgrading to achieve quality development.
In addition, with China being a key driver of global growth, its successful growth model shift could have a significant impact on the rest of the world, they added.
Facing opportunities and challenges
An economic work conference held by China's central leadership not long ago pointed out that the global environment for the important period of china's strategic development opportunities has changed a lot
The opportunities China faces are not such traditional ones like integrating itself into global labor division system, expanding export and speeding up investment, but fresh ones of expanding domestic demand, improving innovative capacity and transforming its economic growth model.
As global economic prospects remain fragile and Europe's debt crisis lingers, external demand for China is unlikely to improve. However, this can also be an opportunity for the country to concentrate on economic growth quality and efficiency and the transformation of growth pattern.
"The global economy has entered a period of profound transition and correction from a period of fast growth in the pre-crisis years," the conference said, warning of rising protectionism and increasing pressure from potential inflation and asset bubbles.
Long Guoqiang from the development research center under the State Council said due to developed economies' slowdown, global investors will be more optimistic about China's economic prospects.
“Against this background, the middle and high-end resources worldwide are expected to be redistributed. By the time, the new trend of advanced industries shifting to China will emerge, thus creating a great opportunity for China's industrial structural transformation,” Long said.
Zhang Qizuo, vice president of Chengdu University, held the contraction of external market leads to the reduction of China's export dividends and it has to expend domestic demand and innovate, which are new opportunities for development.
Zhang added that China is faced with a different period of strategic opportunities from that of the past. “As global economic growth points have been transferred from the developed country to the developing country, China's opportunities will also shift from focusing on both internal and external demands to giving priority to domestic demands.”
Echoing Zhang's opinion, Lian Ping, chief economist at the Bank of Communication, noted that domestic demands will replace external demands as new opportunities for China's economic development.
Lian explained that with per capita GDP reaching a middle level and quick urbanization in the central and western areas, a window of new opportunities for China is opening up.
On the other side of the coin, the risks and challenges that China faces in economic development should never be overlooked, he added.
The central economic work conference indicated that the current unbalanced, uncoordinated and unsustainable development remains a big problem. In addition, the contradiction between economic downturn and production overcapacity has aggravated while problems of rising production cost and weak innovative capabilities exist.
Gao Peiyong, head of the Finance and Trade Economics Institute under the Chinese Academy of Social Sciences, held that slow global economic recovery, overcapacity and potential problems in financial field are the risks and challenges that China faces in the short term.
Guo Tianyong, researcher of the Central University of Finance and Economics, said the latest round of quantitative easing in the Unites States will result in the excess liquidity worldwide and this will in turn push up inflationary pressure next year.
Zhang Liqun, an analyst with the Development Research Center of the State Council, shared his view that as market supply and demand relations have changed, the rising costs of labor, resources and land have increased the pressure on unbalanced, uncoordinated and unsustainable development, thus posing challenge to China's sustainable and healthy economic development.
Seeking quality growth
Facing both opportunities and challenges, China is to change its growth model and make domestic consumption a pillar of its economy as experts said. And at same time, more importance should be attached to the quality of growth and to moving up the value chain, so as to achieve sustainable and healthy development.
A statement issued after the central economic work conference said enhancing quality and efficiency of economic growth "will be a central task” next year, marking a major shift from solely pursuing growth speed to paying more attention to the fitness of economy.
In his speech at the 18th National Congress of the Communist Party of China (CPC), Hu Jintao, its former general secretary, said China must speed up the creation of a new growth model and ensure that development is based on improved quality and performance.
To boost quality growth, the expanding of domestic demand will be a strategic basis next year. New growth points should be created in domestic consumption, which will serve as both a strong pulling power and foundation for sustained and healthy development.
China's economy has for most of the past three decades relied the advantage of a large and inexpensive labor force to become the world's largest manufacturer for the global consumer markets. But China now needs to restructure its economy to wean off reliance on exports for growth, as its main trade partners like the European Union and the United States are embroiled in debt crisis.
Urbanization has been considered as a main driver for domestic demand and will be actively and steadily pushed forward in 2013, according to the statement.
"Advancing urbanization will boost both investment and consumption, which plays a significant role in promoting China's sustained and steady growth," said Lian Ping, chief economist at the Bank of Communication.
The urban population on the Chinese mainland, which exceeded rural population only at the end of 2011, is expected to hit 70 percent by 2040.
In a country with a population of more than 1.3 billion, each percentage point of urbanization ratio represents an increase of 1.3 million urban residents, which can translate into trillions of yuan of investment and consumption.
Although China has entered the ranks of middle income countries, many enterprises still remain in an unfavorable position in global industrial value chain.
Hu Jintao stressed in his speech that top priority must be given to scientific and technological innovation in overall national development.
Experts agreed that to transform the economic growth pattern, innovation should be developed into a new driving force, thus realizing the internal growth of economy.
In the new development period, China's economy is to strive to transform from being “factor-driven” and “investment-driven” to being “innovation-driven”, featuring improved productivity by means of technological advancement.
China will push forward industry upgrading through enhancing enterprises' innovative capability, and steadily shift away from cheap assembly lines to high value-added production, from “made in China” to “innovated in China.”
China's growth model shift a boon to world
Globalization has given the international community a common destiny where China cannot prosper without the world, nor can the world without China.
China's economic transformation will not only take the country further toward more balanced, coordinated and sustainable development but also have a significant impact on the rest of the world, playing a bigger role in spurring global economic growth.
China's expanding domestic demand will give impetus to world economic growth. With a larger consumer market, China will import a richer variety of commodities ranging from energy and raw materials to consumer goods and services. And this will increase employment and bring vitality to others, in particular to Europe, U.S., and the emerging markets.
"The most significant impact of China's structural reform on world economy is that China will transform from a so-called 'world factory' and 'major exporter' to perhaps the world's largest consumer market," said a Chinese economist Wu Jinglian. "It will become an important force in maintaining stability and steady development of the global economy."
Morgan Stanley China has projected a golden decade for China's consumption. By 2020, the country's total retail sales will be equivalent to two-thirds of that of the United States and will account for 12 percent of the world's aggregate, it said.
China's economic restructuring and industrial upgrading will also optimize global industrial structure. Its growth will be driven mainly by strategic emerging industries and modern service industries. This transformation will push forward the industrial upgrading worldwide, therefore giving the developed economies which have advantages in technology and service more cooperative opportunities.
Jeffrey Bader, a senior fellow at the Brookings Institution and former senior director for East Asian affairs on the U.S. National Security Council, said countries and enterprises gained enormous benefits from trading with China, which has become an important player in the global trade system.