Full speed ahead for China’s economy in 2018

By Li Hong Source:Global Times Published: 2018/1/18 22:33:40

Illustration: Peter C. Espina/GT

China's economy fared better in 2017 than a year earlier, growing 6.9 percent year-on-year with nominal GDP surpassing $12.5 trillion, the National Bureau of Statistics reported on Thursday. If calculated by purchasing power parity (PPP) - which the IMF did in 2015 - the size of the economy exceeded $20 trillion.

Celebration with fanfare isn't needed for the policymakers, pundits say, as unknown and unfathomable obstacles could suddenly crop up in the road ahead.

Xi Jinping, general secretary of the Central Committee of the Communist Party of China (CPC), announced at the 19th CPC National Congress that socialism with Chinese characteristics has crossed the threshold into a new era.

In the new era, China will embark on a new journey toward its two historic centenary goals: building China into a moderately prosperous society in all respects by 2020, ahead of the 100th anniversary of the founding of the CPC the following year, and building a modernized socialist country by 2049, when the People's Republic of China celebrates its centennial anniversary.

Facing these daunting tasks, cool and calm heads will prove to be best.

Most economists have forecast China will grow 6.5 percent in 2018, with the World Bank estimating 6.4 percent growth for China. Following the economy's structural reform and optimization in the past several years, the prospects look much brighter, and it is possible the current expansion momentum will be maintained to 2018 and beyond. 

The economy of China now sits on a much more solid and stable foundation, backed up by steadily rising domestic consumption thanks to a rapidly growing middle class, and an endless series of investment projects such as airports, subways and high-speed railways, high-technology ventures, and the establishment of new cities like the Xiong'an New Area southeast of Beijing.

Overall market demand is expected to stay strong, fueling economic development in 2018, experts say. This is attributable to the rising purchasing power of Chinese households, which are gobbling up a long list of items from clothing and cosmetics to smartphones and electric cars.

The rapid expansion of expressways, bridges, tunnels, airports and railways will ratchet up demand for energy and resources.

The government's three-year plan to help lift 23 million rural residents out of poverty before 2020 will also add to overall demand, as many new homes will be built.

The variable could be foreign trade, as China's sales of goods and services to its largest export market, the US, could be inhibited if the Trump administration plays up protectionism in 2018 by imposing heightened tariffs or other punitive measures on imports from China.

Elsewhere, the uptick in economic growth in the eurozone, Japan, Russia and Southeast Asia since 2017 and constant consumption boosts in those markets will continue to support trade with China.

The massive "Belt and Road" initiative is a boon to investment and trade, too, while boosting the lives of tens of millions along the route.

China has already morphed from a period of industrialization to a new phase of high-quality expansion, and economists suggest that it stop chasing an excessive growth rate because that model is unsustainable.

Instead, China should insist on technology innovation - in mobile internet penetration and modernization of traditional industries, in new-energy vehicle development and exploration of advanced defense technology - to shore up global competitiveness.

In this regard, Shenzhen, which is expected to become the world's next Silicon Valley with GDP of more than 2 trillion yuan ($311 billion) in 2017, is an example for other Chinese cities to follow.

However, experts have warned of possible headwinds for the Chinese economy in 2018, including domestic debt woes, a crackdown on industrial pollution and uncertainty about the real estate sector. Rising geopolitical tensions surrounding China, such as the Korean Peninsula, and tensions across the Taiwan Straits could also have adverse effects on development.

China's breathtaking growth in the past 40 years has shown that a stable, united government like the one in Beijing, and a centralized administrative system, has succeeded in keeping the economy in the fast lane and given it unparalleled resilience after a few cyclical slumps.

The author is an editor with the Global Times. bizopinion@globaltimes.com.cn


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