World Economy

China Priorities Shifting

China Priorities ShiftingChina Priorities Shifting

South Korea should brace for a “new China” as the world’s second-largest economy is entering a crucial stage in its transition into a new growth model, according to analysts.

The neighboring country is undergoing an “economic rebalancing” triggered by four major forces?deleveraging, restructuring, urbanization and a rising middle class, signaling that it is moving toward a consumption-driven, services-oriented economy, Yonhap reported.

China is going through a structural adjustment in its economy by shifting priorities, presenting both opportunities and challenges for Korean firms.

Slowing GDP figures and weaker equity and currency markets in China are unnerving many, but they need to take the developments as a natural event that should occur to keep the economy vibrant and relevant, not a harbinger of an economic meltdown, analysts say.

“The year 2016 will be a crucial one for China’s transformation into a consumption, service-based economy. These tectonic shifts from an old to a new China will not only create shockwaves there but also in the rest of Asia,” Natixis Asia Pacific chief economist Alicia Garcia Herrero said.

China will see major shifts in such areas as population, growth models and consumption pattern, she added.

Experts say that South Korean companies should understand the implication of the ongoing change to seize opportunities and stay ahead of Chinese players.

“If China consumes more, it should benefit South Korea in the sense that Chinese consumers could purchase South Korean-made goods or services,” Guillen of the Wharton School said.

“South Korea needs to continue positioning itself as a higher-value added designer and maker of goods. It needs to stay ahead of China’s efforts to move up the technology ladder,” he added.