Has China's Economy Reached a Turning Point?
China's economic data has been moderately positive since the beginning of this year. Economic growth has been better than expected while exports and domestic consumption have improved while gains have been made in other areas as well. As a result of this short-term upturn，there has been considerable debate about whether the Chinese economy is entering a "new growth cycle." But from a structural perspective，the economy does not really possess factors that will produce a significant rise in economic growth over the longer term. At the same time，the recovery of the global economy remains weak and anti-globalization sentiment is spreading，creating circumstances that are not favorable to China's exports. China's current economic situation should be seen as something closer to renewed volatility rather than the beginning of a new and more robust economic cycle.
A new cycle requires a reshaping of the demand and supply side of the economic growth picture. At present，China's financial system and the economy as whole are in the process of shedding inventories. This is not the start of a new cycle.
The economic cycle marks a change in the rhythm of the macroeconomic system. In order to judge when this occurs we need to analyze the factors that affect economic growth. From the experience of domestic and international economic cycles，the start of a new cycle requires low factor prices，low capital costs and new growth conditions. Low factor prices depend mainly on the long-term impact of population growth，improved labor productivity，the promotion of a one-time decline in the cost of production and a relative revaluation of human capital as a result of new technological breakthroughs.
Low capital prices are reflected in the reforms that produce financial deleveraging and extend new financing channels，alongside cuts in interest rates and the bank deposit reserve ratio. It is more noteworthy that the start of a new cycle requires the exploration of new growth points to stimulate demand and form sustainable，long-term economic growth momentum.
One of the channels that influences domestic factor prices is long-term population growth，specifically the decline in the labor supply as a result of China's aging population. This has a direct impact on the economy's potential economic output. In 2010，China saw a demographic turning point as the growth in the working age population (individuals from 15 to 64 years of age) continued its decline，indicating an aging population. This directly affects the marginal changes in the labor force supply and demand. On the supply side，the marginal decline of the labor force will affect the stock of human capital and further affect the price of labor. On the demand side，the marginal reduction of the total population will have a structural impact on the demand for housing over the medium and longer term.
The way to solve the problem of the drag on economic growth from an aging population is to improve the quality of human capital through structural reforms. Look at Japan，which has a serious problem with an aging population. Although the decline in the size of the labor force has had a negative impact on Japan's economic growth，the improvement in human capital quality is a positive contributor to economic growth momentum. At present，China's population is already aging. This will add to labor costs over the longer term. As a result，factor prices do not support the opening of a new cycle until major reforms can be introduced to further improve the labor supply structure.
From the perspective of capital，domestic financing costs are still at a relatively high level when compared with historical levels. One reason for the rise in financing costs is the complexity of financing channels. If there is substantial progress in deleveraging，the financial environment may promote more short-term economic fluctuations，but not enough to create a new economic cycle. In recent years，China has seen rapid development of the financial sector with numerous types of financial institutions gaining footholds. One problem for China is the lengthy lag time from financial sector activities to affect the real economy. The essence of financial deleveraging is to dismantle this elongated link and promote transparency across the entire transaction process. However，excessive financial deleveraging could cause corresponding upward pressure on enterprise financing. In the current economic environment where policy makers have set the twin goals of achieving steady growth and controlling risk，there is a great need for controlling leveraging and easing pressure on corporate financing. As a result，it is clear that funding costs cannot be reduced overnight. In this sense，only when financing channels are broadened and further deleveraging has been achieved can it be said that a new cycle is about to begin.
New Growth Drivers
The emergence of a new growth cycle depends on whether the external and internal environment permit the emergence of new and obvious growth points for the sustainable future. If we look at China's peak to trough economic data，starting with the reform and opening up in 1978-1979，GDP growth rates can be divided into three major cycles. The first economic cycle (1981 to 1990) followed the launch of the reform and opening program. The second cycle (1991 to 1998) benefited from the dividend brought about by the implementation of the socialist market economy，and the third cycle (1999 to date) has reflected gains from the accession to the World Trade Organization (WTO) and heavy industrialization. This was also closely linked to tax and other reforms as well as the financial and corporate mergers and acquistions aimed at resolving large amounts of corporate debt. It is obvious that the start of a new cycle of China's economy basically presents new economic dividends.
Global Economic Cycle
The current world economic recovery is slow，and there is no clear evidence of a new cycle，and that will inject volatility into China's economy.
China's economic development and the transformation of world economic growth through globalization are intertwined. Economic and financial globalization has increased interdependence，increasing the likelihood of a global impact from shocks to any major component of the global system. Even the current trend against further globalization has not reversed this trend of deeper economic integration. China's economic growth is an important contributor to global growth，but it is subject to a continuing global economic rotation. Over the longer term，macroeconomic growth of countries around the world will display a considerable amount of synchronization and mutual influence.
The health of the export sector is one contributor to China's economic recovery. The United States took the lead in the global economic recovery and the European Union has also regained its economic footing. The stabilization of