The New Normal is arguably one of the most popular words in China in 2014. President Xi employed this term to inject new inspiration for the development of the economy of his country. Apparently almost all Chinese economists are convinced by the appropriateness of the diction and they keep this term at hand when speaking in public and private occasions. What most people fail to realise is that the New Normal is not a static situation where the GDP growth keeps at a certain rate. The New Normal is a process instead of a utopia where everything is rosy.
The Chinese language always puts challenge and opportunity together to show a certain sense of sophistication created by contradictory attitudes towards something. In this sense, the slowdown of the economy also means there’s big room for progress. So, glass half full instead of half empty. What China really needs now is a sense of rationality on the front of economic development. Many economists attributed the domestic overcapacity to a way of thinking that simply puts GDP measurements first and ignores the rules of the market economy. Professor LI Yining, a renowned pro-market economist, said that this was the reason why now is the best time for deepening reforms in order to restructure and upgrade the economy. Professor Justin-Yifu LIN, former World Bank Chief Economist and Senior Vice President, built on this and argued that in the past China’s economy relied on low-end manufacturing, heavy industries that brought about environmental hazards, and low value added products, now it’s time to pivot to “new forms of business”, such as e-commerce, Internet-financing, and a more flexible and digitally based allocation of resources.
No good deed goes unpunished. The interest groups formed over a period of more than three decades are the biggest obstacles for further reforms. The leadership’s solution, which emerges over a series of executive acts, includes the New Normal that takes off the heat of “development first” mentality for government officials and enables them to shift their attention to other problems such as the environmental problems, the social discontent, and the institutional design of the Chinese society.
So, regardless of the implication of the New Normal in the economic sense, it is really about political reforms. The resolves are strong and they are more than words. It is proposed by many representatives that a to-do list is set up to guide the government officials, not only their policy-making, but also their administration. The managers of this country may have been confused of what to do, but now they sure get the memo.