China shall be able to achieve a stable economic growth of around 7.5 percent in line with the official target, former vice premier Zeng Peiyan said on Thursday.
Delivering a keynote address at the Future China Global Forum in Singapore, Zeng said that China hopes for its economic reforms and adjustments to be carried out amid a gradual and stable process of slowdown instead of a sharp one "so that the gains in productivity can make up for factor-driven slowdown."
"We rely on reforms and adjustments to address the long-term challenges, and make good use of the macroeconomic tools such as the fiscal and monetary policies to address the short-term challenges," Zeng said.
"China still enjoys significant room in terms of the macroeconomic policies," he said.
Zeng said that the Chinese economy grew by 7.4 percent in the first half of the year and that there had been signs of stabilization.
Zeng said that he does not expect there to be any dramatic shift to the pursuit of a proactive fiscal policy and a prudent monetary policy.
Zeng said it is not surprising for China's economic growth to slow down after decades of really fast growths. Its per capita gross domestic product (GDP) reached 6,747 U.S. dollars last year.
"China has become a middle-income economy and it is a challenge facing China whether we can transcend the middle-income trap," he said. "The Chinese leadership are fully aware of this, and the medium-high growth has come to be accepted as the new norm."
Zeng said that China needs to make efforts such as remodeling, rebalancing, reforming and reengaging, or 4Rs to avoid falling into the "middle-income trap."
He said that China needs to remodel its economic development and increase productivity and innovation. It also needs to rebalance economic structures towards emerging industries and less- developed parts of China. The world's largest developing economy also needs to deepen structural reforms, and reengage, or further integrate China into the global economy.
He said that the establishment of a pilot free-trade zone in Shanghai marks the beginning of a fresh round of efforts by China to further integrate into the global economic order.
Zeng compared the current round of efforts of re-engagement with China's accession to the World Trade Organization in 2001, which marked the beginning of China's efforts to integrate with the world market.
The negative list and the pre-entry national treatment are pilot schemes of high standards in line with international best practices. They will allow the free trade zone to easily integrate with the international economic system, Zeng said.
A pilot scheme will also be launched at the appropriate time in the free trade zone to allow free convertibility for yuan capital accounts, he said.
"We should also bear in mind that the Shanghai Free-Trade Zone will be the test bed for the fresh round of efforts by China to reform and open up, and that the pilot schemes that have proved successful will be duplicated and expanded in other parts of China, " he said
The former vice premier said that China is boosting efforts to negotiate free trade pacts and pursue multilateral agreements, too.
"The few years from now till 2020 will be crucial to China's economic transformation. I believe that implementing the 4Rs will spur a new round of economic growth so that China can realize its goal of doubling the per capita GDP by 2020," Zeng said.
Zeng also said that he does not expect sharp rises in housing prices like those seen in the past, nor sharp falls. The trends in the real estate markets had been different across the different tiers of cities in recent months.
Zeng said that China has widened the daily trading band for the yuan against the U.S. dollar to 2 percent earlier this year from 1 percent.
"The exchange rate of the Renminbi now is largely determined by the market," Zeng said, adding that the pressure on the Renminbi to appreciate had moderated as a result of factors such as U.S. dollar outflows and China's current account surplus