In the past, Chinese growth was too much fueled by credit. Now it is becoming more sustainable and the emphasis is shifting on living standards, poverty reduction, and environmental protection.

In his annual work report, Chinese Premier Li Keqiang said on Monday that China aims to expand its economy by around 6.5 percent this year, or the same as in 2017.

However, numbers do not tell the full story. In the past, credit growth was almost twice as high as the growth rate. Now the government’s attention is on credit risks and higher-quality growth. The latter is exemplified by rising per capita incomes, eradication of poverty and the struggle against climate change.

Decelerating growth, rising incomes

Barely a decade ago, China still enjoyed double-digit growth. Today China’s growth is slowing relative to its past performance. Historically, that is the norm with all industrializing economies.

At the same time, rapidly-rising living standards are supporting thriving consumption. This narrative can be illustrated with the first term of President Xi Jinping and Premier Li Keqiang and their projected next half a decade, assuming the current trend line and peaceful conditions will prevail.

Between 2012 and 2022, Chinese growth rate could decelerate from 7.9 percent to 5.8 percent. Despite deceleration, living standards will double. In 2012, Chinese GDP per capita income was about $11,000. By 2022, it may increase to $20,000. That means that per capita incomes are likely to grow by 6.7 percent in China. That’s more than four times the comparable U.S. figure in the same time period.

In other words, the past “high-speed” growth, which was typical to intensive industrialization, is morphing into “high-quality” growth. Due to China’s huge size, the repercussions will reverberate around the world.

End of abject poverty

President Xi Jinping’s idea of “Chinese dream” is predicated on greater economic focus on quality and equality of development.  In the coming years, that is likely to mean investments in social equity to reduce uneven coverage of pension and health care insurance nationwide and better public services