A day after China said its economy expanded at the slowest rate in 24 years, its central bank governor expressed willingness to sacrifice growth for stability. “If China’s economy slows down a bit, but meanwhile, is more sustainable for the medium and long-term, I think that’s good news,” Zhou Xiaochuan, who started as People’s Bank of China governor in 2002 when Alan Greenspan was still Federal Reserve chairman, said at the World Economic Forum in Davos Wednesday. China is willing to take “a bit lower growth rate with stronger structural reform,” he said.
China’s economy expanded 7.4 percent in 2014, the slowest expansion since 1990, as old drivers such as property investment waned. Among positives, services increased their share of the economy to almost half and stimulus efforts including the first interest-rate cut in two years showed signs of traction, boosting December industrial output and retail sales.
“It’s a concept in the New Normal,” Zhou said, referring to a phrase used by President Xi Jinping to explain a slower, steadier expansion path. “If the government pursues too high growth rate, it may ignore or postpone those necessary structural reforms — and now I think people care more about structural reform,” Zhou said.