China-Britain trade chief backs Chinese structural reform

The head of a trade organization helping British firms in China has backed the Chinese government's shift from demand stimulus to supply-side structural reform.

Stephen Phillips, chief executive of the China-Britain Business Council (CBBC), said he is confident of the potential in China despite the economic slowdown and that he is encouraged by Chinese leaders spelling out a new focus for economic reform.

The leadership said earlier this month that China should introduce policies to improve the supply side of the economy, a significant strategic shift in macro-economic regulation.

"It's a sensible thing to do, because if you do demand-side stimulation most of the time, it's very short-lived. You spike the demand and may cause bubbles. If you address the underlying supply-side issues, there will be a much more long-term impact on the overall economy," Phillips told Xinhua during the China Outbound Forum in southern Sanya City.

"It takes longer to see the results and very often the government has to do a mix of the two, but getting that balance right, and having less focus on stimulation and more on re-engineering the economy is the right way to go," Phillips said.

China's economy grew 6.9 percent in the first three quarters of this year, its slowest pace in six years, leading to some pessimism about its prospects. Phillips, however, is not among the naysayers.

"The Chinese economy is slowing down in percentage terms, but the absolute size of the economy is growing faster than ever. The focus just on percentage growth is a little bit misleading, because in terms of commercial opportunities, it depends on the size of the economy, not the growth of the economy," he said.

The trade chief pointed out that even at 6.9 percent, the Chinese economy still represents huge opportunities as it is being restructured and rebalanced from export-led to consumption-driven growth.

"There are mixed pictures. Some sectors and provinces are going to have hard times while others are growing very quickly. From a business point of view, you have to look beyond those national figures to see what is actually happening within specific sectors and provinces," Phillips said.

When it comes to the likelihood of volatility in China's economic growth, he believes "that's natural as the Chinese economy is bigger and more mature, but it's still going to grow much faster than most economies."

The CBBC has been a close observer of China's 13th Five-year Plan, particularly concerning the Belt and Road Initiative. The organization released a report outlining opportunities for British companies in 13 core provinces and seven sectors.

"We think the Belt and Road is very important as it will reshape the global economy over the next few decades, and companies should be aware of that and begin to position themselves," Phillips said.