Commentary: Premier's blueprint for Chinese economy emphasizes reforms, benefits world growth

Chinese Premier Li Keqiang's recently published article on China's reform drive and international cooperation shows the country's pragmatism and determination, and charts a new and unprecedented blueprint that will also benefit world economic growth.

Li's article titled "China's economic blueprint", which was published in the Economist magazine on Nov. 2, depicts the direction and key points of China's reforms as well as prospects and paths of international cooperation.

In the article, Li sent the world a clear message that the criterion the Chinese Government uses to assess its economic performance has altered from quantitative expansion to quality improvement and efficiency increase.

Indian Prime Minister Narendra Modi told Li while they met in Kuala Lumpur, Malaysia on Saturday that he was impressed by the article, highly commenting on Li's philosophy on economic development.

Li acknowledged in the article that one by-product of structural reform, which the Chinese Government is currently undertaking, is a fall in the relevance of indicators such as power consumption, rail-cargo volume and new bank credit in gauging economic performance.

The three indicators Li mentioned are components of what has been known as "Keqiang Index", a term first devised by the Economist based on the method Li had used to evaluate local economy when he was secretary of the Communist Party of China Liaoning Provincial Committee from 2004 to 2007.

In this new article, Li elaborated on the same indicators with evolved viewpoints so as to keep pace with the times. Noting that Li highlighted employment, income levels and the environment as priorities for the government, analysts called these indicators "new Keqiang index", which is apparently better in line with the new normal of the Chinese economy.

For Guo Shengxiang, dean of the Australian think tank Academy of APEC Creative Finance, the "new Keqiang index" actually exhibits an emphasis on economic efficiency, indicating that policies are advancing with the times and maintain guidance.

With the service industry expanding to account for half of the country's gross domestic production and consumption contributing to 60 percent of economic growth, the old assessment criteria are less relevant to economic growth, thus can no longer precisely reflect the new normal of the Chinese economy, Guo said.

Amid a sluggish recovery of the world economy, China has been facing the pressure of a significant economic slowdown. However, the country has refrained from opening the sluice for liquidity, which will pull it back to the outdated extensive growth pattern, but opted, instead, for a new sustainable development path focusing on encouraging domestic demand and innovation.

This policy option is clearly presented in Li's article, in which he wrote, "What is called for is not temporary fixes: my government has resisted the temptations of quantitative easing and competitive currency devaluation. Instead we choose structural reform."

Accompanying the alteration of indicators is the acceleration of China's economic growth engine. Led by the "Internet Plus" initiative, a wave of innovation is playing a great role in rebuilding the Chinese economy, speeding up the growth of new industries, upgrading traditional ones and creating numerous business opportunities.

Evidently, as no reform comes without pains, it will always sacrifice short-term growth, and give rise to imbalance and discrepancies among industries, leading to the slowdown of certain economic indicators. In the long run, however, this is not a bad thing because it shows, on the contrary, that structural adjustments have yielded positive results.

It is just like what Li said, "Yet this transition from 'bigger is better' to 'less is more' is a good thing. I would otherwise worry whether the reforms were working as intended."

Li's confidence is originated from China's huge economic volume, the government's ability to manage the whole situation, the strong consensus on reform within the Chinese society, the immense attractiveness of the Chinese market, and the huge potential in great integration of resources and essential factors of production both at home and from abroad.

"On industrialization and urbanization, we offer partnerships in industrial-capacity cooperation. Combining China's prowess with the cutting-edge technologies of the developed economies, we can, together, supply good equipment at good prices to the developing world, sustaining robust growth with supply-side innovation," Li wrote in the article.

The blueprint Li charted in his article is not exclusively owned by the 1.3 billion Chinese people. Rather, it will also benefit people in the rest of the world and provide new and lasting driving force for the recovery of the world economy. Endi