As 2021 quickly draws to a close, Chinese policymakers are expected to convene a major economic meeting in Beijing in mid-December to set the course for accelerating structural reforms while overcoming a series of challenges in 2022. Investors in the the world is watching closely for clues about next year. policy and reform program as China has become the main engine of the world economy.
Considering the country’s usual plan of choreographing an annual growth rate for the coming year, Chinese policymakers should set the GDP growth target at “above 5%” for 2022. The International Monetary Fund (IMF) has predicts that China is expected to achieve 5.6 percent economic growth next year. It is necessary to aim for relatively rapid growth of 5.5 to 6 percent in order to create enough jobs and maintain economic and social stability.
Thanks to lower inflation levels in the country, the People’s Bank of China, the central bank, is expected to use more aggressive counter-cyclical financial tools to help Chinese companies accelerate technological transformation and increase production in 2022, and at the same time, stimulating the country’s vast middle class to continue shopping by browsing and clicking on many e-commerce platforms on their cell phones. Increasing household consumption will always remain the priority of policy makers to stimulate GDP growth.
On the fiscal side, China’s central government is expected to maintain proactive spending to build more bridges, dig more subways, build more high-speed trains, and deploy more 5G base stations across the country. Public spending on health care, education, the livelihoods and well-being of retirees, and national defense capabilities will all be increased. To counter the growing pressures of the economic slowdown, a relatively loose monetary and fiscal policy is widely seen as essential. The central bank is expected to reduce the reserve rate that commercial lenders are required to hold before March.
China, overcoming an unprecedented series of difficulties, recorded a 2.3% increase in GDP in 2020 while the world’s other major economies plunged 3.5% on average. In the first three quarters of this year, China’s economy has jumped 9.8 percent from the same period last year, according to data from the National Bureau of Statistics. This year, China is expected to achieve a growth rate of 8.2% with an estimated annual GDP of $ 16.1 trillion, remaining the fastest growing economy among the G20 countries.
From 2013 to 2020, the Chinese economy grew by 6.7% on an annualized basis, against world average growth of 3.1%. This spectacular achievement of the Chinese economy is attributed to the hard work and competitiveness of Chinese workers and Chinese enterprises, and, in particular, the ruling Communist Party of China (CCP) and the country’s top leaders have shown proof. an extraordinary skill in economic management to navigate the giant economy through turbulent waters like the 2008-09 global financial crisis and the Covid-19 pandemic.
Nonetheless, the world’s second-largest economy is currently facing strong headwinds, including the new variant of the Omicron coronavirus, the financial risks posed by Evergrande’s debt problems, the potential impact of the US monetary policy reversal and a thorny business relationship with the Biden administration.
The Chinese economy, which experienced an impressive rebound from last year’s coronavirus-induced recession, lost momentum in the third quarter of this year as China grappled with the manufacturing slowdown, l ‘increase in real estate market debt, intermittent Covid-19 epidemics and historic levels of flooding in central provinces including Henan and Shanxi. A global semiconductor shortage has also had a negative impact on automotive manufacturing and other industrial sectors. The fall quarter saw the economy grow 4.9% from the same period last year, significantly slower than the 7.9% growth in the second quarter.
But the country knows how to solve the temporary challenges. Overcoming a short-term electricity supply crisis, Chinese factories are booming again and the official manufacturing purchasing managers index rose to 50.1 in November, the first increase after six months of decline. And, whether it’s the Delta or Omicron variants, China knows how to firmly control new outbreaks and keep factories, offices, restaurants, pubs, and cinemas open for operation and business, by approving strictly its “Zero Covid” policy and never reduce preventive measures
In addition to domestic consumption and investment in infrastructure, Chinese exports have been hectic since the start of this year, becoming another important pillar of GDP growth. For months, the media and Western economists have been making the same prediction that China’s rapid export growth cannot last. The facts proved them wrong. The country’s export machine continued to explode until December.
In 2022, structural economic reform measures are expected to deepen. First, the digital transformation of Chinese industries and multiple tertiary service lines will accelerate, as more resources are invested in super-fast internet connections, big data, industrial and service robotics, artificial intelligence innovations and applications.
Second, China has made marked gains in innovation and the use of new energies as well as in the popularization of electric vehicles, these efforts will only intensify in the years to come. Solar panel parks and wind turbines are expanding across the country. This year, electric vehicle sales are expected to reach 2.7 million and in 2022, sales will likely reach 3.5 million, making China the undisputed world leader in low-carbon development.
In addition, urbanization – another big engine of growth for China – will continue, as more rural workers move to cities. The central government should come up with more measures to tackle income inequality by regulating internet platforms to ensure fair and proportional income and well-being for tens of millions of blue-collar workers such as delivery men. Home construction is expected to gain momentum in 2022, after China focused on reducing debt problems for developers and tackling property bubbles in 2021.
Source: Global Times