March 5th, 2012
04:13 PM GMT
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Hong Kong (CNN) – It's interesting to watch the knee-jerk reaction in the markets to China's softer growth forecast.

After nearly a decade of targeting - and invariably exceeding - an 8% annual growth rate, Beijing is now setting it at 7.5%.

We shouldn't be surprised. A clear flag was raised just last week in a report on China's economy from the World Bank, and a Beijing-backed think tank calling for a rebalancing of China's "unsustainable" economic growth.

The new mantra is not headline growth. It's sustainable growth, inclusive growth. It's making sure that the Chinese people share the riches. In an economy with a yawning rich-poor divide this is not just good economic sense, it's basic survival.

So the emphasis switches from exports (about 25% of economic input) to domestic consumption. The process actually began in the ashes of the 2008 global financial crisis, which underlined the dangers of relying on capricious overseas consumers for growth at home.

But it will take time. Even in a quasi-planned economy like China's it will take years to switch from being the world's factory to the world's shopper; and probably as long to focus investment on market needs rather than political imperatives.

But make no mistake, China is changing its game, and beginning to take the steps required. For that reason alone, the sell-off on the global markets may look overdone.

soundoff (7 Responses)
  1. surajit patnaik

    Any thing else wouldn't be logical.

    March 5, 2012 at 4:56 pm |
  2. Marco Hsiao

    Now millions of small civilian businesses are operating in Mainland China, every year ten thousands of new small businesses are created (of course every year some unsuccessful businesses are closed). They are the real growing power in Mainland China. Some is growing to become middle scale businesses. Lots of businesspersons from ROC Taiwan, Hong Kong and Singapore are also investing in Mainland China

    On the other hand, the treasury of corrupt US Federal is on the course moving to bankruptcy. The revenue of US Federal is 2.2 trillion, but it spends about 3.2 trillion, it borrows 1 trillion (6.6% of GDP) but the economic growth is 3%; thus the number is fake and artificial.

    After 2009 Mainland China is largest exporter on the earth, and is moving to become largest importer in about 2019. It will be a big landmark in world history. It is possible in 2029, China's export will be double than the US, in 2039, China's import will be double than the US, too. The spectacular world is changing.

    March 6, 2012 at 5:14 am |
  3. Marco Hsiao

    Some CNN photos are nice in art but not in news. After "news photos" are added art handle (to symbol something) it might mislead the real situation. Photos in the US are normal and balanced, why foreign photos must be in art handle? It seems to indicate that the journalists could not (or not familiar) speak or read Chinese writing?

    March 6, 2012 at 5:20 am |
  4. sameh

    Terrifying sight snake swallows girl

    March 7, 2012 at 1:51 pm |
  5. jakson

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    March 13, 2012 at 12:52 am |
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    May 15, 2012 at 7:56 pm |
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