The markets came down last week when China announced its projected growth rate for 2015 at 7 per cent, after clocking the slowest growth in 24 years last year (at 7.4 per cent). The nervousness flows from China's key role in contributing substantially to global growth in output and international trade since the Asian financial crisis of 1997.
Yet, China's new normal - as its leaders call the slower growth that is to continue for some years - is not as dire as it appears at first glance. A transition of the globe's second-largest economy towards a more sustainable and, hopefully, better-quality growth model would benefit the world as a whole.
As it is, 7 per cent growth will mean an increase of US$790 billion (S$1.1 trillion) to China's economy over the next 12 months (based on the US$11.3 trillion output this year, estimated by the International Monetary Fund). This still represents a substantial increase in opportunity to exporters, particularly those from economies with relatively slower growth. In relative terms, the 7 per cent growth this year is still more positive for the global economy than an 11 to 12 per cent growth rate was 10 years ago (when its output was US$2.3 trillion), given the much larger size of the Chinese economy now, as a London School of Economics professor observed.
All that would be a sop to those who set great store by the essential reforms that China needs to undertake to address deep-seated issues weighing on the nation. Structural reforms, for example, are needed to increase the role of private business, encourage innovation and grow the services sector - so as to reduce reliance on a debt-laden, investment-driven growth model. Further, the relatively cheap labour that powers its export-oriented industries is drying up as wages rise in tandem with costs and its population ages. Hence, China has to make necessary changes, however wrenching it is and however determined the resistance of vested interests.
The danger is if China's leadership gets cold feet and both sidelines its reform plans and resorts to more stimulus programmes should a sustained slowdown result in social discontent. That might jeopardise a push towards a touted "green" growth which would help alleviate the choking pollution that bedevils all who live in Beijing and other big cities. Also at risk would be the effort to raise per capita GDP to bring about inclusive growth and greater social justice. State-owned enterprises that are much in need of reform might also continue to lumber along in key areas like infrastructure, telecommunications and energy.
With so much on the reform agenda, more is expected than just lip service paid to it, as heard at the National People's Congress. Much is at stake in how China actually reinvents itself.