China must slow down, says Alibaba founder Jack Ma

China's economy grew 7 percent in the second quarter, according to the National Bureau of Statistics, and the government expects full-year growth to be about the same, making it the weakest annual growth in 25 years

Alibaba's Jack Ma (GETTY IMAGES)

Alibaba’s chairman, Jack Ma said slowing consumption in China should not alarm its investors, in a letter published on Tuesday on the company’s US focused website Alibaba Defined.

Alibaba’s market capitalization has declined by more than $120 billion from its peak, with China’s economy heading for its slowest pace of growth since 1990 as the leader sought to reassure his investors.

“Recently, signals of China’s economic slowdown have triggered widespread concern and, I believe, overreaction around the world,” wrote Ma.

China's economy grew 7 percent in the second quarter, according to the National Bureau of Statistics, and the government expects full-year growth to be about the same, making it the weakest annual growth in 25 years.

Ma said that the slowdown was not only manageable, but welcome.

“If China continues to pursue the high growth rates of the past, then China will pay a high price,” he said, adding that the country's economic development should be focused more on quality than on quantity.

He reminded his investors that even with a GDP growth rate of 5 per cent, China’s growth rate is more than double that of developed economies.

Ma, China’s second-richest man, suggested the company should embrace change focusing on “globalization”, “development of the rural economy” and “big data” in the next decade.

He is betting on the use of big data and Internet technology to stimulate domestic consumption and generate exponential development opportunities.

“We firmly believe that we will see substantial returns from the investments we have made in data and related technologies over the past six years and will continue to make in years to come. Still in its infancy, we are working to make data and cloud computing the foundation for an inclusive economy. The future potential is massive,” he said

Ma’s statements come after complaints about counterfeits on its websites have contributed to its share slump. Last week, the American Apparel and Footwear Association said Alibaba's e-commerce marketplace Taobao should be put back on the US government's “Notorious Market” list for allowing the sale of fakes.

Additional reporting by Reuters