Zhang Peng | LightRocket | Getty Images
Robots dance during a consumer electronics expo at the Beijing China National Convention Center on Jul. 8, 2017 in Beijing, China.
China has been fighting debt for years, but with little success so far as it balances economic stability against the fallout that would come from a sharp deceleration.
However, recent comments from Beijing indicate that the country is engineering a moderate slowdown and changing up growth drivers. At the opening of the 19th Chinese Communist Party Congress in October, President Xi Jinping said his country will move from high-speed to high-quality growth.
Last week, state news agency Xinhua reported China is planning to build a 13.8 billion yuan ($2.13 billion) technology park for the development of artificial intelligence.
“If you look at all this new economy, it’s all about connectivity, about productivity,” said Xing.
A few years ago, 6 Chinese yuan (92 U.S. cents) in debt generated 1 yuan (15 U.S. cents) in GDP, but now it just requires 3 yuan (46 U.S. cents) of debt to do the same, he added.
Xing said the contribution from consumption will continue to grow and the pace of growth for China’s debt-to-GDP ratio is expected to mostly stabilize in the second half of 2019.
Already, the services sector is creating more than 10 million jobs a year, which is more than off-setting the cumulative 4 million job losses in old economy sectors such as machinery and steel, he said. Those industries have been witnessing layoffs due to an official crackdown on over-capacity.
There will “be lower risk, slower pace of growth, but better quality,” said Xing.