New normal and new economy: a new growth engine for China
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New normal and new economy: a new growth engine for China Yusaku Nishimura1 Received: 24 November 2019 / Accepted: 5 March 2020 © Japan Economic Policy Association (JEPA) 2020
Abstract As the economy stepped into the “new normal,” the Chinese government has implemented various policies to transform its economic development model to pursue an innovation-driven growth. Against this background, the most innovating field is the Internet-based “new economy.” A major feature of the Chinese new economy is that it is based on a new payment system. Various new businesses have been developed owing to third-party payment platforms (particularly Alibaba’s Alipay and Tencent’s WeChat Pay) and a vast ecosystem has been created around them. Moreover, the development of the Chinese new economy is helping to expand consumer spending and is becoming a new economic growth engine. Keywords Chinese new economy · New normal · Innovation · Online payment
Introduction Currently, China has entered a new stage of economic development, namely the “new normal.” In November 2014, the president of the People’s Republic of China, Xi Jinping, attended the opening ceremony of the APEC CEO summit and delivered a keynote speech. In this speech, president Xi noted that the new normal of China’s economy has the following three features1: First, the economy has shifted gear from the previous high speed to a medium-to-high speed growth. Second, the economic structure is constantly improved and upgraded. The tertiary industry and consumption demand are 1 The keynote speech was titled “Seek Sustained Development and Fulfill the Asia-Pacific Dream.” Full text is available at the official website of the Ministry of Foreign Affairs of the People’s Republic of China (https://www.fmprc.gov.cn/mfa_eng/topics_665678/ytjhzzdrsrcldrfzshyjxghd/t1210456.shtml).
* Yusaku Nishimura [email protected] 1
Institute of International Economy, University of International Business and Economics, Beijing, China
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16% 14%
1981-2010
12%
10.1%
10% 8% 6%
2011-15
7.7%
4% 2% 0%
1981 1985 1989 1993 1997 2001 2005 2009 2013 2017
Fig. 1 China’s real GDP growth rate: 1981–2018. Data: National Bureau of Statistics of China
becoming the main driver. Urban–rural and regional disparities are narrowing. Household income is going up as a percentage of national income. The benefits of development are reaching more people. Third, the economy is increasingly driven by innovation instead of input and investment. The growth pace of the Chinese economy has shifted significantly from high speed to medium-to-high speed. According to the National Bureau of Statistics of China, China’s real GDP growth rate in 2018 was 6.6%, the lowest annual growth rate since 1990. China’s real GDP growth rate was on average more than 10% for the period 1981 through 2010, but it dropped to 7.7% during the period of the 12th 5-year plan (2011–15), showing a gradually declining trend (Fig. 1). It is almost im
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