Employees work on a smart assembly line at a forklift company in Hefei, east China’s Anhui Province, April 13, 2022. Cities are trying to balance production and epidemic prevention to ensure stable economic development. Photo: cnsphoto
From two of China’s key economic drivers, investment and consumption, to nascent growth spots like pre-made food and China’s relentless push for reform, economists have seen several bright spots in the growth momentum. China’s economy for the remaining months of 2022, despite economic difficulties due to unexpected events. challenges, including the COVID surges in Shanghai and the Ukraine crisis.
They express confidence in the country’s prospects of achieving the annual GDP growth target of 5.5%, as the recent deployment of support policies, whether micro or macro, monetary or fiscal, begins gradually to take effect in multiple economic zones.
The confidence displayed by domestic economists is also a firm rebuttal from many overseas analysts, who expressed some sort of appreciation for China’s economic performance in the first quarter, but would not be swayed by their bearish outlook on China’s economic outlook. China.
China’s hard-earned steady start to the first quarter fully demonstrates a continued unchanged recovery and unchanged economic fundamentals characterized by strong resilience, enormous potential and vitality, as well as long-term sustainability, the carrier said on Tuesday. Foreign Ministry spokesman Wang Wenbin at a regular press briefing. .
Facts “have proven and will continue to prove” that China…will effectively face risks and challenges to achieve healthy and sustainable economic development and inject more energy into global economic recovery, Wang said.
On the more practical question of whether China can meet its 2022 GDP growth target, all economists polled by the Global Times voted yes, although some weren’t one hundred percent sure because uncertainties in the course of the development of COVID.
Lian Ping, director of the Zhixin Investment Research Institute, told the Global Times that despite lingering shocks to the real economy in the second quarter, he is confident that the annual economic growth target could be met, with a policy mix. including various monetary and fiscal tools. support to stimulate stable growth and provide relief.
Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at Renmin University of China, told the Global Times that he believed there was more than an 80% chance that China could meet the GDP target, as long as domestic industrial chains and logistics system are not blocked amid COVID control methods.
Economists have pointed out that the Chinese economy is resilient because the country has always launched reforms in an orderly manner, such as in scientific and systematic fields, despite external and internal fluctuations.
China on Tuesday adopted guidelines on establishing a digital government and promoting tax system reforms at the provincial level, a report by China Central Television noted. The meeting stipulated that China should straighten out fiscal relations in local governments below provincial levels to further standardize income distribution.
Main drivers and bright spots
Broadly speaking, economists have summed up the country’s economic momentum for the second half of 2022 as “twin engines”, investment which plays a fundamental role in supporting the economy and consumption which has high chances of recovery. after the COVID epidemic subsided, as well as several bright spots such as new infrastructure.
In particular, infrastructure investment will be the main driver of economic stimulus as it is a “dead certificate” to pump economic output following the large-scale and ahead-of-schedule issuance of special bonds, Hu Qimu, chief researcher at the Sinosteel Economic Research Institute, told the Global Times on Tuesday.
“The added value of the investment industry will be most evident in the second and third quarters, after China enters the peak construction season,” he said.
There were signs of a bright outlook in China’s manufacturing investment in the first quarter economic data. In the first three months, China’s secondary industry grew 5.8 percent, faster than the overall economic growth rate of 4.8 percent, which analysts see as a sign of growing momentum.
“The modernization and transformation of the country’s manufacturing sector shows outstanding performance in the first three months – an important positive signal of a rising macro-economy,” said Yu Miaojie, vice dean of the National School of Development. from Peking University, at Global Hours on Tuesday.
He noted that it embodies the timely introduction of macro-economic policies, especially fiscal ones.
Besides investment, consumption, another major pillar of the national economy is expected to play a positive role despite the short-term pressure it faces, mainly due to the COVID situation in Shanghai, economists say.
Hu said the consumer sector is subject to many uncertainties, but given that the coronavirus can be contained, a retaliatory rebound in the sector is very likely in the coming quarters, as domestic demand has not slackened. been seriously affected.
“Given the adequate policy support that is already being rolled out, consumption growth will not be too bad for the whole year,” Hu noted.
Some analysts have also focused on new growth drivers in the consumer sector. Wang Peng, for example, said COVID has fueled new consumer business models like pre-prepared food, live role-playing, and more. The arrival of large theme parks and the transformation of commercial environments are also fueling the growth of this sector, he said.
In addition, he noted that China’s digital transformation, which has accelerated the emergence of business models such as new infrastructure, is also a priority and a bright spot for economic development in 2022.
To maintain China’s economic growth target despite external pressures, the government has put in place a number of policies ranging from general structural adjustment policies such as the establishment of a unified market to more specific measures. such as reducing the reserve requirement ratio and methods to facilitate lending after the Shanghai Omicron outbreak. .
China’s economic planner, the National Development and Reform Commission (NDRC), also noted on Tuesday that it will implement policies launched earlier to boost industrial growth and the recovery of the service sector, as well as lead to many priority policies for employment and stabilize the supply of products vital to people’s livelihoods.
According to economists, all sectors designated as China’s future growth points have received political stimulus to ensure their growth.
For example, easing monetary policies and bailouts for local restaurants, retail and other consumer-related sectors would prevent the economic status of people or businesses from collapsing in the near future, so they can spend easily once COVID subsides, Hu said, adding that the credit easing is a bonus for the real estate sector.
A similar situation is investment which is supported by the timely issuance of special bonds. According to Xinhua News Agency, at the end of March, China released all project construction quotas among the 3.65 trillion yuan local government special bond quota for 2022. which accelerates and expands investments.
Some analysts have also called for stimulus measures in other areas like jobs to ensure economic growth.
“The top priority is to stabilize employment, and to achieve this goal, tax and fee cuts should be stepped up with targeted measures to help micro and small businesses survive headwinds,” Cong Yi said. , professor at Tianjin University of Finance and Economics. Global Times on Tuesday.
Yu said that accelerating the establishment of a unified internal market characterized by high efficiency, rules, fairness and openness is of crucial importance to promote high-quality development for the rest of the year. .
“A large and comprehensive domestic market is the greatest potential of China’s economy in the future, which will replace low labor costs to become China’s new comparative advantage,” he said. .