By+Zhou+Xiaoyan

Chinas economic growth slipped to 7.4 percent in the first quarter， signaling more downward pressure for the worlds second largest economy. However， authorities have ruled out the possibility of major stimulus to fight shortterm dips in growth and plan to seek growth momentum in deep-seated reforms and promising domestic consumption.

The first-quarter growth rate marked the lowest quarterly growth level since the third quarter of 2012. But even so， the figure still far outperformed the 6.6-percent growth in the first quarter of 2009 when the global financial crisis was wreaking havoc.

“The figures suggest growth in the worlds second largest economy in the beginning of the year 2014 was stable and that the economy was generally in good health， as Chinese authorities are more focused on reforms， restructuring and the improvement of peoples wellbeing，”said Sheng Laiyun， spokesman of the National Bureau of Statistics （NBS） when releasing firstquarter economic figures at a press conference on April 16.

China is shifting gear in terms of growth rates， adjusting its economic structure and digesting the aftereffects of previous stimulus packages. To shield its economy from the torrents of the global financial crisis， a 4-trillion-yuan（$644.4 billion） stimulus package was launched in November 2008， which pushed up asset prices and resulted in severe overcapacity.

“A slower growth rate represents a conscious choice on the countrys behalf. Local governments at various levels have expedited the phase-out of outdated capacity. They have sacrificed growth rate for greener and more sustainable development. There is certainly a price to pay. But this shift in thinking should definitely be encouraged，”said Sheng.

Chinas macroeconomy will inevitably come under downward pressure in 2014. However， the ostensibly weak data also contains positive factors， bolstered by many achievements in economic restructuring.

Traditional industries such as steel and cement are experiencing an obvious fall， while hitech industries show accelerating growth. The share of gross investment in the service industry and private investment continues to rise.

Along with slowed industrial production growth， the service sector continued to grow in the first three months and make a larger contribution to GDP growth.

NBS spokesman Sheng said the trend indicated the Chinese economy is shifting from an industry-led growth to a service-led one. “We should adopt a new perspective on viewing the changes in the Chinese economy，” said Sheng.endprint

target achievable

The Chinese Government has set a target of around 7.5 percent for economic growth in 2014. It has said that a figure slightly above or below the target would be acceptable because its main focus is on creating jobs and improving peoples wellbeing.

Earlier， when addressing the Boao Forum for Asia annual conference in south Chinas Hainan Province， Chinese Premier Li Keqiang emphasized that the Chinese Government will not opt for a massive short-term stimulus be- cause of temporary volatility.

“A growth rate under the 7.5-percent target is acceptable so long as sufficient creation of employment is ensured，” Li said.

“With all the principles established and policy options at our disposal， we can handle all possible risks and challenges，” the premier said. Streamlining administration and further tax reforms are two of the options on the agenda.“The Chinese economy has got off to a stable and good start.”

A slew of more targeted pro-growth measures， including tax cuts for small and micro enterprises， greater support for shantytown renovation and more investment in railways construction in underdeveloped regions， have been adopted in an attempt to steady growth around its target without disrupting plans to restructure the economy.

On April 16， the State Council also announced a string of financial and tax moves including cutting the reserve requirement ratio for some rural financial institutions， with a view to providing more support for the rural economy and bolstering job creation.

Wang Jun， a senior researcher at the China Center for International Economic Exchanges（CCIEE）， said the recently adopted pro-growth mea- sures will definitely lift the Chinese economy.

“These measures aim to stabilize growth. I think the economic momentum will increase from the second quarter and theres no need to worry that the economy will slide out of control，” Wang said.

Lu Zhengwei， chief economist with the Industrial Bank， said the GDP data are better than expected.

“Considering the governments supportive measures that have just been announced in April， we expect growth to rebound to around 7.5 percent in the second quarter，” Lu said.“Going forward， further monetary policy loosening may not be needed as the central bank has kept money market rates relatively low.”

Zhou Hao， China economist with the ANZ Bank， said growth momentum has stabilized in March， despite the lackluster first-quarter figures.endprint

“Chinas industrial output of enterprises above the designated size—annual principal business revenue of 20 million yuan—expanded by 8.8 percent in March from an average growth of 8.6 percent in the Jan-Feb period. Retail sales grew 12.2 percent in March， up from the last reading of 11.8 percent，” said Zhou.

“In addition， port throughput data and our field study also suggest that Chinas foreign trade may have bottomed out， and will become more resilient than what the current headline numbers suggest，” he said.

Ma yao， a macroeconomy researcher with research institute CIConsulting believed the first-quarter figures dont necessarily represent the trend for the rest of the year and cannot be used to predict the whole-year growth data.

“Many policies had been just formulated in the first quarter. Major reform measures have yet to be fully implemented. The macroeconomy is bound to pick up in the following quarters after those policies take effect.”

Reform-driven growth

The Chinese Government intends to prop up the economy through reforms， rather than by the traditional means of eased monetary policy and progressive fiscal policy.

During his keynote speech at the Boao Forum for Asia， Premier Li Keqiang identified reform as one of Chinas growth engines for driving the Chinese economy.

If massive stimulus is an instant painkiller， reform is like minimally invasive surgery.

In 2013， a total of 416 administrative approval items were cancelled or delegated to lower governments by the Central Government. Other reform measures， such as business registration system， replacing turnover tax with value-added tax and mixed-ownership reform among the bloated stateowned enterprises （SOEs）， are underway to inject more vigor to the market.

Chinas reform efforts have already paid off， as the number of newly registered companies surged by 27.6 percent last year.

The government promised to cancel or delegate over 200 administrative approval items in 2014 and to provide more tax cuts for small and micro-firms.

Tian Guoqiang， Dean of the School of Economics with Shanghai University of Finance and Economics， said SOEs can hardly serve as the backbone of the Chinese economy.

“Whether or not China can realize long-term high-speed development depends on whether the country can deepen reforms，” said Tian.

Decisions made at the Third Plenary Session of the 18th Central Committee of the Communist Party of China held last November said the market should play a decisive role in allocating resources. This is a very good sign， said Tian.endprint