A tale with many dimensions: Fu Ying explains the many challenges facing China and predicts a successful outcome because of strong fundamentals.

• Author: Ying, Fu
• Position: Report

All three drivers of China's growth--investment, export and consumption--are slowing in various degrees. And new sources of growth are not strong enough to replace the traditional ones, which are declining. But a readjustment was to be expected. After 30 years, China has become the second largest economy, but it could not grow at a high rate indefinitely. Despite problems the prospects for the Chinese economy remain good. Overcoming continuing disparities in development provides an opportunity for maintaining growth, and the fundamentals of the economy are sound and resilient. Changed rules will make foreign investment in China more attractive.

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New Zealand is a popular tourist destination for the Chinese. It is adored for its fresh air and mind-blowing scenery, not to mention the Hobbits. And especially for Chinese mothers, New Zealand makes high quality baby formula!

When preparing this presentation, I was told that Chinas economic slowdown is what people are concerned about. Indeed, the many comments about Chinese economic volatility contrast sharply with those of the years of bullish outlook. Chinas economy is facing very sophisticated challenges, but the prospects remain good because the fundamentals of the economy are resilient.

When I left China the Standing Committee of the National People's Congress of China, of which I am a member, had just had its August session. One of the important duties of the National People's Congress and its Standing Committee is to supervise the work of the government. Ministers are required to report their work regularly and sometimes to face questions.

During the August session Xu Shaoshi, the minister of the National Development and Reform Commission (NDRC), reported to us about China's current economic performance. He assured us that Chinas economy remains generally stable, but noted some deep-seated difficulties and problems.

All three drivers of China's growth--investment, export, and consumption--are slowing in various degrees. And new sources of growth are not strong enough to replace the traditional ones, which are declining; that is, the labour intensive export sectors are facing difficulties caused by the rising cost of labour and resources and a sluggish export market.

There is also the problem of capital flowing more into the virtual economy than the real economy, which increases financial risks. The uncertainties of the global economy are also having an impact on China's economy.

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