BEIJING -- Chinese President Xi Jinping's administration faces a bumpy road ahead as it seeks a soft landing for the Chinese economy and then a path of stable growth to solidify the country's position as a global power.
China has a history dating back millennia of seeing its sphere of influence repeat cycles of expansion and contraction. The country experienced a long period of contraction following the two Opium Wars in the mid-19th century.
But the communist regime introduced a policy of "reform and opening-up" in the late 1970s, paving the way for the country to again enter an expansionary phase.
The ongoing slowdown in the Chinese economy, now the world's second-largest after the U.S. in terms of gross domestic product, will remain one of the biggest concerns for the global economy this year.
Limits to economic stimulus
It is possible for China to achieve "high growth" in the near term through a massive economic stimulus package, Xi said. But the country will not do so because high growth is not sustainable and would also pose a risk to the global economy.
Xi made the remarks on Nov. 15 in Antalya, Turkey, during a summit of leaders from the Group of 20 major economies, including U.S. President Barack Obama and Japanese Prime Minister Shinzo Abe.
At the G-20 conference, Xi stressed that China will sustain "medium-high growth" of around 7%, instead of pursuing double-digit growth as it has done in the past. This reflects his strong sense of crisis over the domestic economy.
The Chinese leadership, led by Xi, says the country's economy has entered a "new normal" of somewhat slower but stable growth. It is also aiming to maintain medium-level annual GDP growth of more than 6.5% on average over the next five years.
China can no longer pursue excessively strong growth through a massive economic stimulus package as it faces various issues such as rising labor costs, widening disparities and serious environmental degradation.
The Chinese leadership is now shifting its policy focus to pursing sustainable and stable growth while transforming its investment- and export-driven growth model into one led by technological innovation and consumer spending.
China's per-capita GDP currently stands at about $8,000, roughly one-seventh that of the U.S. Emerging markets in Latin America and elsewhere experienced economic stagnation after their per-capita GDP rose to around $10,000.
Maintaining stable economic growth is China's top priority as the country is seeking to double both its GDP and people's income levels from 2010 to 2020 and solidify its position as a global power matching the U.S.
Private sector crucial
But it is not so easy for China to boost its technological innovation and consumer spending. For the short term, the government has no choice but to shore up the faltering economy, including through accelerated infrastructure investment.
But local governments in China are saddled with huge debts and cannot afford to spend a lot of money. Under such circumstances, the Chinese leadership is putting emphasis on promoting infrastructure investment through a public-private partnership.
Li Jianchun, the top official of the Banan district of Chongqing, described the inland Chinese area as "an economically backward area" in the country and said that the PPP formula is the "best way to achieve growth while curbing (local) government debts."
PPP projects worth a total of 110 billion yuan ($16.8 billion) are currently planned at 54 locations in the Banan district alone. They include projects to construct tunnels, housing for the low-income people and waste disposal facilities.
Work has already been launched on priority projects at 10 locations.
As things stand now, companies participating in the PPP projects are mostly state-owned. But Li said foreign companies can also participate in the projects "on equal footing" with state-owned Chinese firms.
The "medium-high growth" target could end up being a pie in the sky unless China frees up the vigor of the private sector and makes its economy more efficient with the help of market forces.
To that end, China will inevitably have to break down entrenched vested interests in the communist regime through measures such as reforming state-owned companies.
Finance Minister Lou Jiwei, a leading reformist bureaucrat in China, warned that the country has a "50-50 chance" of sliding into the so-called middle-income trap -- a situation in which a country's development slows after achieving a certain level of per capita income -- in the next five to 10 years.
Many people around the world are paying close attention to whether Xi can make "medium-high growth" a goal that is both realistic and within reach.