SOURCE / ECONOMY
Officials are upbeat with China’s economic performance, as economic data points to quicker recovery
Strong fiscal stimulus may help China realize 5.5% growth
Published: Jun 28, 2022 11:03 PM
Workers manufacture display panels on an assembly line in Huainan High-Tech Industrial Development Zone in East China's Anhui Province, on April 24, 2022. Photo: VCG

Workers manufacture display panels on an assembly line in Huainan High-Tech Industrial Development Zone in East China's Anhui Province, on April 24, 2022. Photo: VCG

Chinese officials are sending out confident signals over the country's economic situation after the recent coronavirus crisis, as they stressed on Tuesday that the country has the capacity to cope with any potential unexpected changes and keep the economy operating in a stable, sustainable manner. 

This renewed confidence is not only backed by the latest economic data, which demonstrated an improving landscape, but also by the fact that China has accumulated valuable experiences in balancing coronavirus control and economic development, experts said. 

When asked whether China can achieve the 5.5 percent planned GDP growth target for 2022, Ou Hong, deputy Secretary-General of the National Development and Reform Commission (NDRC) said during a press conference that China has "full confidence" in overcoming challenges in economic management. 

He said that the coronavirus resurgences had been brought under control in major Chinese cities, the resumption of work is speeding up, and economic stabilization policies are starting to show their effects. Under these forces, China's economy has shown "marginal improvement" in May, with major economic indicators telling a solid rebound. 

Ou said that China's economy will continue to display strong resilience, ample potential and sufficient room to grow.

"The signal of better performance for the economy is without doubt," said Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, adding China's economy has a lot of room to expand, as domestic markets can make up for external demands fluctuations, while the Asian markets can make up for the US and European markets."

According to economists, China's economic data in May reflected that positive factors are increasing in the Chinese economy, boosting market sentiment and bolstering officials' confidence in achieving a robust recovery.

China's major industrial added value increased by 0.7 percent in May, compared with a 2.9 percent decline in the previous month, data from the National Bureau of Statistics showed. Trade value also increased by 9.6 percent in May in renminbi terms, up 9.5 percentage points compared with the previous month. 

However, economists are split over whether China can achieve the planned target of 5.5 percent GDP growth, which has been the center of public interest. Ou didn't give a direct answer during the aforementioned press conference. 

Lian Ping, head of Zhixin Investment Research Institute, estimated that China's GDP growth is expected to remain in the range of 4.6 to 4.9 percent for the full year, with a median of 4.8 percent.

"The investment and exports together could add about 4 percentage points to GDP, while consumption could add 0.6 to 0.8 percentage points," Lian told the Global Times on Tuesday.

However, he noted that if China issues 1.5 trillion yuan ($223 billion) of special anti-pandemic bonds, it may raise China's economic growth to a range of between 5 and 5.5 percent for the year.

Tian Yun, a veteran macro economist, said that the 5.5 percent GDP growth target may not be just a short term consideration, but rather an important target in the longer term.

"Through the positive comments, the government might want to send out a signal that 5.5 annual GDP growth rate should be an important target during the 14th Five-Year Plan (2021-25) period. And from this perspective, even if China can't achieve 5.5 percent growth this year, the actual growth should not be too far away from it," Tian told the Global Times. 

Dong also predicted that China's GDP could grow by about 5 percent this year under the current package of economic stimulus policies. 

Officials also noted that China should focus on three aspects of work in the face of downward economic pressure, which are implementation of policies that have been rolled out, coordinated pandemic prevention and control, and economic and social development.

Some economists also elaborated on the NDRC's plans in specific economic areas. For example, Su Wei, Deputy Secretary General of the NDRC, China's top economic planner, said that China will further amend and enlarge the scope of its industrial catalogue for encouraging overseas investment, while preparing to launch a new round of key overseas invested projects at the appropriate time. 

Zhao Chenxin, deputy director of the NDRC, said during the press conference that China's economic development had not only maintained reasonable growth in volume, but achieved stable improvement in quality in the past 10 years. According to Zhao, China's economic output surged from 53.9 trillion yuan in 2012 to 114.4 trillion yuan in 2021, while per capita GDP also increased from $6,300 to more than $12,000.