GDP growth to reach around 5% in 2024 if potential is fulfilled: research
Published: Jan 11, 2024 10:29 PM
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Lujiazui Photo:VCG

Lujiazui Photo:VCG

The research team of the ACCEPT has reaffirmed the potential of China's economic development as being significant and still untapped. This is because the long-term growth potential of China's economy is hinged on the potential of demand and supply side. 

On the demand side, in terms of China's demographic structure, the proportion of rural permanent population is 36 percent, and there is also 18 percent of urban permanent population who have yet to obtain urban household registration (hukou) status. Therefore, there will be huge room for future urbanization and transfer of rural population. If the space in the two areas is tapped, the potential demand in the country can be released. 

Additionally, China is home to a 400 million strong middle-income population. We should also be aware that there are also 900 million people in China with junior high school education or above and the per capita disposable monthly income across the country is not high, with a median at less than 3,000 yuan ($418.4). If we focus on improving income, consumption potential can be further tapped.    

On the supply side, China has significant advantages in areas such as gross savings rate, sci-tech innovation capacity and human resources. China's 40 percent gross savings rate is high in the international standards, which offers solid foundation for mitigating bad debts. Moreover, the potential of China's sci-tech innovation is enormous. 

The country is the top source of international patent applications filed with WIPO, and about 40 percent of undergraduates and postgraduates are science and engineering graduates, which exceeds developed countries including the US. Although the total population in China has reached its peak, the total pool of human capital is still increasing given the health and education indexes. China's average life expectancy has risen to over 78 years and there are approximately 140 million healthy and active elderly people aged 60-70. Besides, the duration of education continues to increase. These factors will all contribute to the continuous release of economic growth potentials.  

According to the estimate by ACCEPT, if these advantages can be fully utilized, China's potential economic growth rate can reach 6 percent in the 2021-2025 period, 5.8 percent in 2026-2030, and 5.2 percent between 2031 and 2035. That means China's economic growth is far from reaching its peak.  

Certainly, there are several urgent issues that need to be addressed. They include the complex property market situation, heavy local government debt burden, lack of confidence and vitality of the private sector, the West's stranglehold on energy security and AI, the gap between macroeconomic data on consumer confidence and micro-level perceptions and untapped potential of urbanization. To fundamentally address these problems, the macro policy must shift from preventing "economic overheating" to "economic overcooling." The signals sent from the Central Economic Work Conference showed that the central government will implement a more proactive development strategy. 

If we can avoid risks and effectively implement the key policies, China's economic growth is expected to reach around 5 percent in 2024 with its actual performance significantly stronger than 2023. 

The article is compiled based on a latest research report released by the ACCEPT, Tsinghua University.