The "new normal", a term used by President Xi Jinping for the first time last May while explaining the Chinese economy's slowdown, has become one of the most important economic terms in the country after the government made it a key word for the annual Central Economic Conference in December, and, possibly, in China's economy in the years to come.

 

Three features of the "new normal" are economic growth slows down from high-speed rise to middle-and-high-speed growth; the economic structure is upgraded; growth is driven more by innovation than the input of production factors and investment.

 

To some extent, restricting government power is a central task of the reform to make the best of the "new normal".

 

The central authority clarified various roadmaps for the reform last year. This year will be a crucial time to implement the reform plans, and set up the institutional framework for a market economy.

 

The rule of law, instead of government power, should serve as a fundamental base to define relations, according to the requirements of a market economy, among the key factors characterizing the "new normal", which include, as the Central Economic Meeting outlined, consumption, investment, export, production capacity, production factors, market competition, restrictions of resource and environment, economic risk, resource allocation and macro-control.

 

With the rule of law as the principle, the government will divert its attention from a pre-matter approval authority to a supervisor and market watchdog. The market should open up for all legal players, and the competition should be on equal footings and fair, irrespective of the players' backgrounds.

 

Consumption and innovation, two engines for economic growth in the "new normal", come from the market economy, rather than a government-dominated "approval economy".

 

The operation of China's "new normal" also requires the country to further integrate into the global labor distribution system, and value chains. China should deepen the reforms in finance and trade in light of international conventions, and take initiatives to promote global governance reform in international finance and trade realms.

 

China created the Shanghai free trade zone one year ago, and three more in Tianjin, Fujian and Guangdong in December.

 

The FTZs are not only experimental fields to explore new reforms, but also important channels for China to expand trade and cooperation with the targeted trade partners, as Tianjin for the South Korea and Japan, Fujian for Taiwan, and Guangdong for Hong Kong and Macao.

The Silk Road Economic Belt and the 21st Century Maritime Silk Road, two projects proposed by Chinese government to construct infrastructures and promote regional integrity, are of strategic importance for China in adapting to its "new normal". 
 

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