Commentary: 7 pct or less, no nightmare for Chinese economy or the world

According to some international observers, the year 2015 will be a watershed for the Chinese economy featuring lower growth that the dynamic emerging economy has never seen in decades.

Adding to the concern, the People's Bank of China, the central bank, has recently cut the commercial banks' deposit reserve ratio, a move interpreted by some market analysts as another negative sign of the Chinese economy.

To the West, China's double-digit growth in the past three decades was unimaginable. However, when the speed lowered to middle-high level, the world seems not prepared.

For a long time, there has been a "Speed Complex" in China.

"China GDP expands at slowest pace in 24 years," "End of the Chinese boom" ... those negative words made global headlines when China announced last month that its GDP growth slowed to 7.4 percent in 2014.

There have been wide discussions about China's growth rate entering the so-called "era of six," i.e. in the range of 6 percent to 6.9 percent. Most recently, the International Monetary Fund (IMF) revised down China's growth rates to 6.8 percent and 6.3 percent for 2015 and 2016 respectfully.

Still, the IMF noted the positive signs of China's economy. Alfred Schipke, chief representative of the fund in Beijing, told media that the service sector has been playing a more important role in the Chinese economy, with domestic consumption increasing and the process of de-leveraging of housing and financial sector.

Many international media echoed this opinion. A recent article published by German Spiegel Online said, "Chinese economy slowing down is good!" It is the price that China should bear for its reform and is good to cutting down the environment cost, reducing the risk of housing bubble burst, and preventing the widening of the income gap, wrote the article.

Some economists had already noticed that the ongoing slowdown of the Chinese economy was partly a prudent choice of the policymakers.

A lower growth rate of 7 percent "is a wise choice" of China's government, Michael Spence, a Nobel Prize laureate, told Xinhua in March 2010, when the "Twelfth Five Year Plan" was under wide discussion in China.

The Chinese economy needs to "squeeze water," to keep "strategic calmness' and to adapt to the "New Normal," President Xi Jinping's comments on the country's economy have enjoyed popular support.

However, there are criticisms and worries about China.

"Borrowed too much, built too much," a recent op-ed on the Financial Times expressed serious concerns about the Chinese economy. They worry that housing, local government debt and financial risks may finally cause unemployment crisis, which is a key concern of the Chinese policymakers.

Actually, China had responded to those questions.

China's saving rate is over 50 percent, and the Chinese government is capable of ensuring that there won't be regional or systemic financial risks, Chinese Premier Li Keqiang said at the World Economic Forum in Switzerland last month.

For several consecutive years after the global financial crisis that started in 2008, China has been the top contributor to world economic growth.

As for the labor market, China's urban job creation increased to over 13 million last year when the economy was decreasing.

China should unburden itself from keeping its growth rate to eight percent or seven percent, many strategists suggest.

Huang Yiping, vice president of the School of National Development of Beijing University, pointed out earlier that the connection between employment and growth speed was not that close. Even if China's growth slows down to 6 percent, there wouldn't be the end of the world for China's labor market, Huang said.

For those people who suspect that China may go bust, Paul Krugman's new observation could be thought-provoking.

"Will China break?" as the Nobel Prize winner wrote in his column on The New York Time in December 2011, he probably believed it then.

Yet, he recently seemed to have found a different answer to his own question. He told Chinese listeners in Shanghai that China had successfully defused part of the financial risks, thanks, partly, to the effort by the Chinese government and regulatory authorities. Even though there are asset bubbles and risks of lower growth, the longer-term prospect of the Chinese economy is bright, Krugman noted.

Some international observers suggest that for China, there is no need to burden itself to keep "around seven percent" growth goal.

There won't be a nightmare for China and the world to say goodbye to the "seven (percent growth) era."

"We should go beyond the 'speed complex'," said Xie Lujing, a senior analyst of Chinese capital market and director of Strategic Development department of China Business News. "We'd rather welcome a healthy six percent, not a fake 10 percent," he added. Endi