Commentary: China's economy needs some tweaking

The Chinese economy has an excellent record in at least one respect - its GDP growth rate is likely to touch 8.5 percent this year. This may not be as high as in previous years, but is still stunning given the severe state of the world economy currently.

The domestic economy is, however, not as perfect as it looks. It has a few inherent flaws.

The government's macroeconomic policy this year was aimed at "maintaining growth, restructuring, increasing employment and improving people's livelihood".

So, even as the GDP growth rate seems robust and may exceed the targeted 8 percent, the record is patchy in other areas.

First, China's rebound may be positive in terms of the employment potential, but that is directly tied to the apparent "shortage of migrant workers".

The booming realty market may force more migrant workers to return to the cities, but if the rising investment in real estate is not sustained, then they may lose their jobs, triggering massive unemployment.

College graduates will also confront a tougher employment scenario and may turn into one of the most unstable groups in society.

If the unemployment problem is not solved, real incomes will not increase.

The economy may have grown at a fast clip this year, but disposable incomes have actually decreased and wage distribution is slowing as a result of rising corporate profits not translating into higher real incomes.

Second, a sizable chunk of public investment has gone into infrastructure creation and heavy industries. Yet, they have not set right the imbalanced industrial structure; only worsened it further.

Moreover, with more money flowing into capital-intensive sectors, the funds for creating jobs are in poor shape.

China's export-oriented industries too are having a hard time, and they face numerous obstacles pushing into the domestic market, chiefly because it is not easy for them to find the same excellent service as transnational service-oriented firms such as Wal-Mart and UPS.