Toward services and consumption

According to the third-quarter data, fixed-asset investment continues to lose momentum. It expanded just 10.3 percent year-on-year, which marks the slowest growth since 2000. In contrast, the service sector accounted for 51.4 percent of GDP, compared with the industrial sector's 40.6 percent.

The old China of manufacturing, investment and exports is fading. The new China of services, innovation and consumption is emerging. Typically, retail spending was a ray of light, growing 10.9 percent last month.

Last year, consumption was still 38 percent of the GDP; much more than before but still lower in comparison to other emerging economies. Given the current transition, consumption has the potential to double by 2030, which could lift its relative role in the economy to 50 percent.

Last year, private consumption in the mainland increased to US$3.8 trillion — or the same value of Germany's economy — while Chinese tourists spent a record US$165 billion, an increase of almost 30 percent from the previous year.

During the ongoing year, growth will be within the government's "flexible 7 percent" target, around 6.8-6.9 percent. Next year, growth is likely to decelerate to 6.3-6.5 percent and by the early 2020s it is likely to be around 5 percent.

What this means internationally is that China continues and will continue to grow 3-4 times faster than the major advanced economies: the US, the EU economies and Japan.

Indeed, despite the deceleration of growth, Chinese GDP per capita is expected to double within a decade. Chinese economy is still expanding, but living standards are rising even faster in relative terms — as they should.

Dr Dan Steinbock is the research director of international business at the India, China and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and at EU Center (Singapore). For more, see http://www.differencegroup.net