economy

Chinese economy maintains stable growth in April, with industry, exports indicators improving moderately

A worker produces socks for export markets at a factory in Jimo district in Qingdao, East China's Shandong Province on May 7, 2024.The district has more than 3,800 textile and garment enterprises, with an annual output of about 800 million pieces of garments, which are sold across China as well as in many countries and regions around the world. Photo: VCG

A worker produces socks for export markets at a factory in Jimo district in Qingdao, East China’s Shandong Province on May 7, 2024. Photo: VCG

China’s economy maintained stable growth in April, with key indexes on industry, exports and employment showing improvement from March, data released by the National Bureau of Statistics (NBS) showed on Friday. The set of data underscored that the world’s second-largest economy has been sustaining its solid recovery momentum since the beginning of the year despite facing multiple headwinds – ranging from a prolonged property sector downturn to rising geopolitical uncertainties.

While pressures could persist throughout the year, analysts said the economy is set to embark on a more balanced recovery track and unleash more potential in the second half, as a package of targeted stimulus measures, including support for the property industry and the issuance of ultra-long-term special treasury bonds, take effect and as global demand continued to bounce back.

The set of upbeat industrial data, which shows that China’s high-quality development roadmap is taking shape, has also proven that the US government’s reckless tariff hikes on Chinese industries, which it attempted to justify by attaching the “overcapacity” label to Chinese exports, are futile and doomed to lose traction in the global arena, analysts said.

China’s industrial production jumped 6.7 percent year-on-year in April, compared with a 4.5-percent growth in March, NBS data showed. The metric also beat market expectations of a 5.5-percent expansion.

In April, retail sales gained 2.3 percent year-on-year, down from the March reading of 3.1 percent. Fixed-asset investment rose 4.2 percent year-on-year in the first four months, slightly slowing down from the 4.5 percent growth in the first three months.

“China’s economy remained stable in April. Although some indicators recorded a moderate growth rate as affected by factors such as staggered holiday arrangements and a relatively high base in the same period last year, major indicators of industry, exports, employment and prices improved, with new driving forces maintaining rapid growth,” NBS spokesperson Liu Aihua said at a press briefing of the State Council Information Office on Friday.

Cao Heping, an economist at Peking University, told the Global Times on Friday that some economic data in April has improved slightly compared with the March reading, which bodes well for growth in the second quarter.

Analysts in particular took note of the robust growth in high-end manufacturing.

In April, the value-added of China’s high-end manufacturing gained 11.3 percent year-on-year, marking a 3.7-percentage-point acceleration from that of March. The value-added of equipment manufacturing also increased by 9.9 percent, accelerating 3.9 percentage points from March.

Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Friday that the pick-up in China’s high-end industries is sending out a positive signal on the resilience of the Chinese economy against the backdrop of the malicious US crackdown against China’s advantageous industries.

The Biden administration announced new tariffs on $18 billion worth of Chinese imports on Tuesday, including Chinese-made steel and aluminum, semiconductors, electric vehicles (EVs), lithium batteries and components, and photovoltaic cells, among other items.

In response to a question on the impact of US tariff hikes on the Chinese economy, Liu said at the press briefing that the overall operation of the economy shows considerable resilience and potential, which is beneficial to mitigating the impacts of external shocks.

“As intrinsic vitality and reliability of the domestic circulation are further strengthened, and as China’s sheer market size advantage is further utilized, it is expected that domestic demand will further recover, with the role of internal drives becoming more prominent,” Liu said.

Chinese officials and observers, nevertheless, also took note of multiple headwinds including a “more complex, severe and uncertain external environment,” insufficient domestic demand and a property sector downturn across the year, and called for more efforts to “frontload and effectively implement” introduced macro policies.

Chinese policymakers on Friday issued a number of supportive policies to bolster the property market, including relaxing down payment policies and cutting loan interest rates.

Also on Friday, China issued the first batch of 1 trillion yuan ($140 billion) in ultra-long-term special treasury bonds, as the authorities seek more funding to shore up government spending and strategically important projects’ investment for high-quality economic development.

“The bond issuance needs to be completed as early as possible, considering that there is still some softness in the economy,” Tian Yun, a veteran economist based in Beijing, told the Global Times. Cao noted that it would take two to three months for the effects of the ultra-long-term treasury bonds issuance to bear fruit, and that in turn would elevate the whole-year GDP growth by 0.1-0.3 percent.

Observers have predicted that GDP growth in the April-June period would still hover at around 5 percent, slightly down from the 5.3-percent growth recorded in the first quarter. As consumption potential will still benefit from the May Day holidays, the country is well positioned to meet its annual GDP goal of around 5 percent, they noted.

In April, China’s consumer price index edged up 0.3 percent from a year earlier, rising for a third straight month. Cong said that signaled a gradual improvement in domestic demand.

“Considering China’s prodigious economic scale, any growth between 4.5 and 5.5 percent should be sound and sustainable,” Cao noted. Analysts said if China’s GDP growth hits over 5 percent per year, the increase in China’s economic volume could roughly equate to the economic output of Switzerland, which is now the world’s 20th-largest economy.

Analysts expect China’s economic growth to contribute around 35 percent to global economic development this year, further consolidating its role as both a stabilizer and key locomotive of the world economy.

Solid GDP growth in Q1 shows China’s economic recovery is gaining momentum

China's economic data for Q1 2024 Graphic: Xu Zihe/GT

China’s economic data for Q1 2024 Graphic: Xu Zihe/GT

China’s GDP reached 29.63 trillion yuan ($4.09 trillion) in the first quarter, up 5.3 percent year-on-year. The national economy continued its good momentum, building on a strong start to the year.

In the first three months of the year, major economic indexes – whether supply or demand, external or internal – continued to show improvement. Meanwhile, the economic structure continues to see optimization and the development of new quality productive forces is picking up speed, boosting confidence that the Chinese economy can navigate through treacherous shoals.

Looking ahead, the Chinese economy’s overall trend of steady, long-term growth will not change, and the country will cultivate advantages supporting its long-term growth on the basis of achieving economic prosperity in the short term, analysts said.

A good start to the year

In the first three months of the year, the country’s GDP grew by 5.3 percent year-on-year, up 1.6 percent from the fourth quarter of 2023 and higher than the annual GDP growth target for 2024. The manufacturing purchasing managers’ index (PMI) bounced back to expansion territory in March, while services PMI reached its highest point since July 2023, underscoring growing market expectations and confidence in the economy.

International financial institutions Goldman Sachs and Citi Group have both raised their forecasts for China’s economic growth in 2024, positive about China’s achievement of its economic growth target in 2024. The vote of confidence showcases their positive expectations for China’s economic growth in 2024 and their confidence in China’s economic resilience. Amid unpredictable changes across the globe, China remains the engine of world economic growth.

Between January and March, the country’s investment in fixed assets grew by 4.5 percent year-on-year, 1.5 percentage points faster than that of the previous year. Specifically, investment in construction and installation grew by 4.6 percent year-on-year and in the purchase of equipment and instruments it jumped by 17.6 percent year-on-year, indicating that companies have been actively replenishing inventory, expanding production and exploring more potential.

The role of consumption in driving economic growth is increasingly remarkable. In the first quarter, the retail sales of consumer goods grew by 4.7 percent year-on-year and online retail sales surged by 12.4 percent, showcasing a vibrant consumption market driven by online spending and digital marketing. It’s worth noting that the country’s consumption structure continues to improve, with residents showing enthusiasm for travel during holidays; the number of inbound and outbound visitors is gradually recovering to normal and box-office revenue has repeatedly been hitting record-high levels.

In addition, the country’s industrial sector continued to see improvement in the first quarter. The total value added of industrial enterprises above the designated size rose by 6.1 percent year-on-year in the first two months, while their total profits went up by 10.2 percent. Along with a new round of large-scale equipment renewals as well as domestic and external demand recovery, China’s industrial manufacturing is expected to see a rapid growth cycle. As a result, the country’s employment sector will also see improvement.

The country’s foreign trade sector has also seen improvement despite external disruptions, with increased expectations and optimization in import and export structure. In the first two months, China’s actual use of foreign investment exceeded 100 billion yuan, showing that China remains a promising destination for foreign investment and a top choice for establishing businesses. The continuous inflow of foreign capital injects vitality into the Chinese economy.

Accelerated economic transition

China’s post-COVID-19 economic recovery is characterized by undulating progress, with twists and turns sometimes, and the prospects are decided by economic structure adjustments and upgrading as well as transition from old to new growth drivers. The boost from new industrialization benefits the application of digital, intelligent and other new technologies, providing momentum for the upgrading of old growth drivers and the cultivation of new ones. Consolidating the smooth circulation of the domestic economic system by further removing barriers will create new opportunities for consumption upgrades.

Meanwhile, there are many highlights in the country’s new industrialization transition, with the digital economy growing. In the first quarter, investment in high-tech industries grew by 11.4 percent year-on-year, in which the investment in aerospace manufacturing and in manufacturing of computers and office devices grew by 42.7 percent and 11.8 percent, respectively. This shows that the development of emerging industries and new infrastructure like 5G and artificial intelligence (AI) is gaining pace.

As representatives of new quality productive forces, new technologies like 5G and AI contribute to the transformation of traditional industries, while nurturing new industries. In line with the guidelines of the central government, provinces’ cultivation of specialty industries based on their own situation not only achieved growth driven by traditional and strategic emerging industries but also boosted the transition from old to new growth drivers.

New types of consumption are becoming mainstream. Along with the steady growth of residents’ income, Chinese consumers have shifted from paying attention to quantity to quality and from consumption based on imitation to personalized, customized and diversified consumption. In the first quarter, the real growth rate of the nationwide per capita disposable income was 6.2 percent year-on-year, higher than the GDP growth rate. The rise in income has driven consumption growth and structural improvement.

The growth of the private sector continues to be facilitated. In the first two months of the year, private investment accounted for 52.6 percent of national total investment, up 2.2 percentage points from 2023. Private sector investment grew by 0.4 percent year-on-year, reversing the trend of decline seen over the previous five months. Along with the rollout of more policies to support the private economy, their role as a new force in boosting Chinese modernization will be more substantial and the fundamentals for the high-quality development of the private economy will be more stable.

Confidence in bright prospects

The continuous recovery of China’s economy is not accidental but a result of resilience and development potential. The reason why the economy can forge ahead steadily despite challenges around the globe lies in both its short-term policies and long-term sound momentum.

In the short-term, China has ample policy room, with a package of policies already in place continuing to produce effects. These policies, aimed at addressing practical issues and difficulties in economic development, play a crucial role in ensuring the continuous rebound of the economy. China has gained advantages in human resources, new technologies and material resources that have accumulated since the reform and opening-up.

Despite a good start in the first quarter, it should be noted that China still faces some difficulties and challenges, including a lack of effective demand, weak social expectations, hidden risks, and an external environment that is increasingly complex and uncertain.

However, those challenges cannot hinder the Chinese economy. China is able to handle difficulties and challenges and to promote high-quality development by acting on the principle of seeking progress while maintaining stability, promoting stability through progress, establishing the new before abolishing the old, and deepening reforms.

Yuan Lei is a research fellow at the Institute of Economics under the Chinese Academy of Social Sciences; Zhang Peng is an associate research fellow at the Institute of Economics under the Chinese Academy of Social Sciences. [email protected]

Well calibration of fiscal, monetary policies to ensure 5% GDP growth in China

A view of the Lujiazui area in Shanghai Photo: VCG

A view of the Lujiazui area in Shanghai Photo: VCG

A well-calibrated fiscal and monetary policy combination, being crafted and orchestrated by Chinese government, will help resolve the intrinsic problems hidden in China’s economy. An aggressive fiscal stimulus, coupled with proactive while prudent monetary policy, is generally thought to provide the economy with sustainable energy, shepherding it to grow by around 5 percent in 2024. 

Independent economists of many international organizations give high marks for Chinese economic policymakers’ learning and wit in blending the monetary and fiscal policies in the past four decades to shore up rapid economic growth, and at the same time successfully resisted the cyclical pressures of inflation and deflation. 

Entering 2024, China’s economy has to overcome the “scar effect” left by the COVID pandemic, including a relatively lackluster domestic consumption and a churning real estate market. Amid the lingering concern about another public health upheaval, the people now tend to snap shut their pocketbooks, and the millennials and generation Z are increasingly hesitant to raise children.

Under these circumstances, the traditional days of steadily growing consumer prices are gone, as China witnessed several months of negative CPI growths in the second half of 2023. To deal with the deflationary pressure, China’s central bank moved to reduce the bellwether loan prime rates (LPR) of both one-year and five-year lengths. Last month, the central bank went aggressive, cutting the five-year LPR by a full quarter percentage, which also has the effect of ramping up the country’s humdrum housing sales as mortgage rates are slashed too. 

Meanwhile, the policy-makers decided to introduce proactive fiscal stimulus measures to fuel up public spending and economic growth. 

In 2024 alone, at least 4.9 trillion yuan of central and provincial government bonds will be sold, with the proceeds to be channeled to building up important public infrastructure projects and fostering new quality productive forces to meet China’s massive market demand for home-grown advanced semiconductor chips, newest AI and algorithm innovations, nationwide 5.5-G mobile network coverage and highly efficient digital business platforms – able to catapult China’s economy to new heights of growth before 2050.

China is determined to “choose transition from high rates to high-quality of growth,” said International Monetary Fund Managing Director Kristalina Georgieva at the just concluded China Development Forum held in Beijing. In her speech to the event, she remarked that China has entered a new era of economic growth, and the country will continue to be a key driver of and a contributor to global economic growth in the coming years.

And, renowned US economist Nicholas Lardy, senior fellow at the Peterson Institute for International Economics and a former senior fellow at the Brookings Institution, told Chinese media that it is unwarranted for many media pundits in the West to disseminate the narrative that “China’s economy is collapsing” and faces a catastrophic outcome. Instead the economy is recovering, and last year’s 5.2 percent GDP growth “is impressive” among major economies. 

For a long time, one of the important reasons why the Chinese economy has been able to scale new heights constantly by overcoming domestic difficulties and withstanding external headwinds is its deep understanding of economic laws, and the decision makers’ creative ways to exploring new and potent growth drivers, as well as the country’s firm determination to implement systemic restructuring, such as the country’s unswerving focus on developing clean renewable energies and battery-powered electric trucks and cars.  

Georgieva thought highly of China’s green development. She described China as a global leader in deploying renewable energy with enormous potential, adding that China was making rapid progress in green mobility. China’s remarkable development success has delivered tremendous benefits to hundreds of millions of people in the world, she said.

Georgieva said that China’s high-quality development still has a bearing to deepening marketed-regulated reforms and giving priority to private sector growth. Deep structural reforms can enhance the conditions for entrepreneurship, innovation and economic performance. For example, a boost to government finances at the macro level could allow some tailored micro changes in taxation policies on businesses to foster fast growth of new enterprises, aligned with the central bank’s monetary policy to increase liquidity through reserve ratio reductions and interest rate cuts. 

And, ramped-up government spending is a key component of aggregate demand that can be strategically important for economic development. China’s central government has announced the issuance of new ultra-long special treasury bonds in each of the following several years to focus on funding major national projects. No matter it is the development of industrial parks, transportation hubs, public services and highly educated and skilled Chinese work force, government spending is indispensable to underpin the growth of future strategic industrial lines. 

The drivers of demand include household consumption of goods and services, private investment, government investment and net exports. As to augmenting China’s domestic consumption – a pivotal part of economic growth, the government has pledged to implement a national drive to provide incentives to encourage trade-in of old household appliances, cars and furniture with new models. The replacement of old automobiles, inefficient in fossil fuel use and polluting the air, with Chinese brand-new electric vehicles will also significantly help improve China’s urban environment. And, Chinese local authorities are encouraging citizens to have more family outings and leisure time to increase cultural and tourism spending.

Regarding foreign trade, despite the headwinds of geopolitical tensions which are affecting trade and capital flows, China saw a robust take-off of foreign trade in the first two months this year, largely thanks to the high-quality and low-price of made-in-China goods, like heavy machinery, home appliances, electric cars and a wide variety of electronic devices. In 2024, China’s total exports of goods will likely grow by 6-8 percent over 2023. Investment, domestic spending and export will guarantee the economy to expand by around 5 percent this year.

IMF head Georgieva said she is confident that China and the world can tackle the challenges this globe is now facing and they can always cooperate to create a more prosperous future in this century. 

The author is an editor with the Global Times. [email protected]

China’s commitment to innovation shines bright on quality development: Nobel laureate Edmund Phelps

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An employee inspects a cellphone chip at an electronic product research and development company in Ningbo, East China's Zhejiang Province on February 22, 2024. The company's products are exported to more than 80 countries in Europe and Latin America, and its overseas order book is full through the second quarter of 2024. Photo: VCG

An employee inspects a cellphone chip at an electronic product research and development company in Ningbo, East China’s Zhejiang Province on February 22, 2024. The company’s products are exported to more than 80 countries in Europe and Latin America, and its overseas order book is full through the second quarter of 2024. Photo: VCG

Editor’s Note: China’s economy is undergoing a critical transformation toward quality growth. During the process, there are many pessimistic views from Western media about China’s economy. However, China has maintained stable growth despite challenges and reaffirmed its commitment for promoting innovation and high quality economic development. How should we objectively observe China’s economic transformation? Nobel Laureate, Professor Edmund Phelps, author of books Mass Flourishing:  How Grassroots Innovation Created Jobs, Challenge, and Change and The Logic of Growth, shared his perspective with the Global Times.

GT: China’s economy is undergoing a critical transformation toward quality growth. How do you perceive the role of innovation in China’s economic growth?

Phelps: The generation of innovation is the main driving force behind China’s economic transformation and upgrading. For China’s economy to further the transition toward high-quality development, there is nothing more important than achieving a higher level of independent innovation.

China used to produce products innovated by other countries, but that has changed with the emergence of corporate giants like Alibaba, Tencent, and ByteDance. China has achieved admirable innovation-driven development in both emerging and traditional sectors including finance, artificial intelligence, and bio-tech.

Currently, China’s independent innovation keeps improving for a few reasons. First, Chinese enterprises are actively studying foreign products and methods, which inspire them to create new products and methods. Second, with the increase in wage levels, Chinese exporters need to develop new products and technologies in order to survive. Third, the level of education has increased, allowing more people to benefit from the new economy. Fourth, local governments have become more supportive of policies that support independent innovation.

GT: The growth of exports of the “new three items” in China’s foreign trade has surpassed 1 trillion yuan in 2023. China has cultivated around 400,000 high-tech enterprises. China’s number of intelligent factories ranks first in the world. How do you view these breakthroughs? How do you view China’s progress and advantages in promoting innovation?

Phelps: For a long time, people have believed that sustained growth and development require continuous innovation. Since the reform and opening-up, China’s innovation mainly relied on imports, but in the past decade, independent innovation has become very important. China can introduce foreign innovative products at an acceptable cost, but it should also shift its focus toward independent innovation.

In recent years, it has been crucial to shift from “Made in China” to “Innovated in China.” This kind of technological progress is needed to enhance productivity and consequently increase wage levels. No one can predict the contributions of leading innovative Chinese enterprises to the global economy, but I believe they will make significant contributions to the global economy.

There is evidence now that a large number of Chinese people have the ability to innovate. Data on independent innovation in China and G7 countries shows that China was already ranked fourth in the 1990s. In the following decade, the rankings of the UK and Canada declined, with China rising to second place, not far behind the US.

Currently, innovation from the US is much less than it was in the past, and there is almost no innovation coming from Europe. Therefore, China can become a major source of global economic innovation. This is a valuable opportunity for China to become a major leader in innovation.

GT: The 2024 Government Work Report is sending an important signal for high-quality development, emphasizing the acceleration of the development of new quality productive forces, actively nurturing emerging industries and future-oriented industries, as well as deepening the promotion of innovation and development in the digital economy. How do you view China’s commitment and potential in promoting innovation?

Phelps: China is currently making many high-tech innovations, and continuing to strive in this area is a wise move for the country. As time goes on, we will see what progress China makes in this regard.

China has taken various measures to promote innovation and entrepreneurship, such as significantly reducing the procedures for establishing new companies, building numerous schools, and facilitating the entry of foreign professionals into China. Equally important is China’s recognition of the importance of allowing competition in the economy. There is clear evidence that China is moving toward the path of entrepreneurship and innovation. The government has reiterated its determination to protect new patents and it is well known that China registers a considerable number of new companies every week.

GT: How can China further unleash its innovative potential to boost its economy?

Phelps: If China wants to achieve great economic flourishing, it must provide extensive opportunities for innovation. The obstacles faced by China, the US, and Europe are the same. In order to continue driving economic growth and achieving mass flourishing, we need to address some fundamental issues, such as how to mobilize mass innovation and how to enable people to achieve self-development.

China needs to accelerate its pace of independent innovation by:

Cultivating entrepreneurs, who will find the direction for business development in a world full of uncertainty and use their abilities to solve new problems.

Cultivating innovative companies, which require imagination, curiosity, and deep insight into new trends. 

China needs to change its perception of independent innovation. Innovation does not end with the conception of new products or methods; it requires the widespread application of these new ideas into commercially viable products or methods. 

To achieve large-scale innovation, China needs to provide a suitable environment of incentive, establish necessary systems, and remove barriers to innovation. Only when the people are energetic can innovation occur, and the national economy can develop. 

To achieve faster development, China needs to cultivate more scientists, and these scientists need to apply their research to the creation and commercialization of new products and methods. This is essential for increasing productivity.

GT: Some media claim that China’s economic growth is peaking, how do you view such opinions? Do you have confidence in China’s economic prospects?

Phelps: Since the reform and opening-up, China has improved productivity and wage levels in multiple dimensions. In the coming years, China will further enhance productivity and wages through grassroots innovation. As more Chinese people engage in innovation, the inclusiveness of the Chinese economy will inevitably expand, leading China toward economic prosperity. 

China can certainly achieve a high level of economic prosperity through independent innovation. Almost the entire world is facing a shortage of innovation capabilities, with some countries experiencing this for decades. Most countries have not found a way out. Now, China is taking the lead in the path of mass innovation. 

GT: China’s capacity to educate and attract human capital keeps improving, with the largest number of STEM graduates. How do you perceive this advantage contributing to the promotion of innovation?

Phelps: The current wage growth level in China has already been able to meet people’s basic material needs. People are beginning to highly value whether they are in an environment full of innovative spirit, and they are starting to pursue a sense of achievement through innovation. By shaping a vibrant innovative environment that stimulates people’s minds to think about a series of new issues, China will become a world leader in innovation. 

China’s factory activity expands at fastest pace in a year, in growing signs of solid economic recovery

A view of the Lujiazui area in Shanghai Photo: VCG

A view of the Lujiazui area in Shanghai Photo: VCG

China’s factory activity expanded for a fifth consecutive month in March and at the fastest pace in a year, beating market expectations, according to a private survey released on Monday, adding to an increasing number of economic indicators that point to an accelerating recovery of the Chinese economy. 

The growing positive signs have significantly improved expectations for the economic outlook in 2024 despite some external and internal challenges. With such strong momentum and a huge package of supportive policies, the world’s second-largest economy will likely exceed the growth target of about 5 percent this year, economists said. 

The Caixin manufacturing purchasing managers’ index (PMI) reached 51.1 in March, 0.2 points higher than that in February and the highest level since March 2023, indicating that China’s manufacturing activity expanded for a fifth straight month at an accelerating pace, Caixin said in a report on Monday. 

The Caixin PMI reading also beat market forecasts of 51 in March, according to Reuters. A PMI reading of above 50 indicates expansion, while one below points to contraction. 

The survey on Monday came after China’s official manufacturing PMI data on Sunday also painted a rosy picture for factory activity in March. The official manufacturing PMI stood at 50.8, returning to expansion territory for the first time since September 2023.

 

“The data for the first quarter basically indicate a strong start for China’s economy this year, which could indeed build confidence and dispel some negative views about China’s economy,” Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Monday, noting strong indicators in trade and consumption. 

The Caixin report showed that both manufacturers’ production and new orders expanded in March, with the sub-index for production hitting the highest level in 10 months. Also notably, the sub-index for new export orders hit the highest level since March 2023 and remained in expansion territory for a third consecutive month, according to the report. 

“The sub-index for new export orders showed a stronger recovery momentum than the same period last year, this is very important,” Tian Yun, a Beijing-based economist, told the Global Times on Monday, noting that if exports continue this trajectory in the coming months, it will offer a huge boost for the economy. 

Exports remain a major growth driver for the Chinese economy, but exports have been under tremendous pressure due to weakening external demand. However, China’s exports have also been improving remarkably this year. In the first two months of 2024, exports jumped by 10.3 percent, compared with growth of 6.7 percent in imports. 

The rebound in trade could also help lift domestic investment and consumption, according to Tian. “Based on our optimistic expectations, China’s economic growth could even reach 5.3 percent or 5.4 percent. If this is the trend, then the West’s claims about the Chinese economy such as ‘Peak China’ will be self-defeating,” Tian said. 

Another source of confidence in China’s growth prospects this year is the country’s strong policy support for economic development. The country has taken a slew of measures to boost various aspects of the economy, including boosting investment and consumption, and China still has plenty of policy tools at its disposal to further boost growth, economists said. 

“We still have plenty of tools in our policy toolbox, which means there is still a lot of room for policy,” Cong said, noting that further policy support is expected to boost high-quality development, innovation and industrial upgrading, and deepen reform and opening-up. 

“Judging from these policy trends, the outlook for economic growth for the rest of the year is very promising,” he said. 

China enters a new phase of high-quality economic development: Russian scholar

 

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A view of Shanghai Photo: VCG

A view of Shanghai Photo: VCG

Recently, a good number of publications have emerged quoting Western sources claiming that the “Chinese growth is coming to an end,” and alleging that “China is exhausted,” with its labor force becoming scarce. They unanimously forecast Chinese economy will decline, however statistics tell that many of these claims are based on lies.

The Chinese economy, in fact, is moving toward the next stage of solid development and is posed to be propelled by new technological innovations, while also pivoting toward low-carbon green growth.

And, the country’s services output value expanded by nearly 6 percent between January and February this year. The Western narrative spinning an end of the Chinese economic miracle is nothing but ill-indented falsification.

China’s economic growth rate of about 5.2 percent last year is much higher than the growth rates seen in Western countries. This means that the gravity of global economic activity has moved to China and other emerging economies in Southeast Asia. 

The Chinese way of rapid economic growth exemplifies a new economic mode for the whole world, in which the institutional structure of the Chinese economy is combined with the government’s strategic planning, the effective management of the monetary and fiscal policies, vigorous market competition, broad use of new and high technologies and more. If one looks for the goals of the Chinese economy which have been announced by the Chinese government, the continuation of the GDP growth by around 5 percent, the creation of more than 12 million new urban jobs, and the drop of around 2.5 percent in energy consumption per unit of GDP, it means that the Chinese economy is going through a new phase of modernization. 

It is this new type of industrialization that will propel much more efficient energy consumption and bring about enormous new opportunities for China and other countries.

What makes the Chinese system of management more efficient than that of the former Soviet Union or the US and other Western economies is that China’s management system is a combination of various instruments to achieve one goal – the growth of the well-being of 1.4 billion Chinese people. Many Western leaders ignore these points, since they don’t understand that the policy of economic growth should be the combination of all those specific instruments.

The article is based on a video speech delivered by Sergey Glaziev, vice president of the VEO of Russia and minister for Integration and Macroeconomics at the Eurasian Economic Commission, at the recent symposium in Beijing. [email protected]

John Ross: China able to achieve around 5% GDP growth target in 2024

 
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Beijing

Photo: VCG

The Chinese government has set a 5-percent economic growth target for 2024. Based on observations and research over the past 30 years related to China’s economy, there is no reason why China cannot meet its 2024 GDP growth target, and undoubtedly, the country will remain the main driver of world economic growth as it has for the past 40 years.

China’s investment ranks second globally in terms of efficiency of investment among the world’s 20 largest economies, and is much more efficient than that of the US, despite previous assertions regarding the country’s low investment efficiency. It’s calculated that China’s economy grows by 1 percent with investment of 8 percent of GDP, in stark contrast to the US, where 10-percent of GDP would need to be invested  for the same GDP growth rate. This means that China’s economic growth rate will largely exceed the US and the EU in 2024, based on last year’s data, and China will remain the main driver of world economic growth.

China aims to double the size of its economy, as well as per capita income, by 2035. In that case, the country’s economy needs a 4.7-percent-year growth rate each year. So far, every year’s economic growth has been above 4.7 percent. The fundamental situation is that China is steadfastly pursuing high-quality development, marching toward its economic target set for 2035.

Over the past years, some Western governments and media have voiced pessimism regarding China’s economic trajectory, implying that China’s economic growth has reached its peak. However, based on more than 30 years of observations and research on China’s economy, it’s obvious that their rhetoric is absolutely falsification.

Over recent decades, we have never seen so much falsification in the Western media. According to official economic data from last year, China’s economy grew 5.2 percent, while the US grew 2.5 percent, and the European economies grew around 1 percent, showing that China’s economic performance was much more robust compared with other major economies in the world.

Western media should aim to find out the truth instead of repeating falsifications. The Western reports of talking down on China’s economy are dangerous propaganda, and even more dangerous for them to believe such propaganda.

China has maintained an annual population growth rate of around 1 percent since 1978 while sustaining an average of 8 percent economic growth during the same period. This indicates that China’s economic advancements are not solely dependent on labor force expansion but are rather driven by the overall development of its economy and efficiency improvement. It is therefore crucial to base assessments on facts rather than simply accepting Western media narratives.

The Chinese government is increasing great efforts to cultivate new quality productive forces, signifying that the country is progressing in the correct development trajectory. In general, the high-tech sectors of the world economy are going to grow even faster than average.

China’s advancement in high-tech sectors has been remarkable over recent years, even under the unjustified clampdown from the US. 

Taking telecommunications as an example, China already has the world-leading telecommunications companies. Sanctions on China’s high-tech giants such as Huawei and ZTE from Western countries show these countries’ weakness in technological competition. If the US high-tech companies could compete with confidence and strength, sanctions wouldn’t be necessary.

Particularly in the burgeoning electric vehicle sector, which is expected to replace the entire combustion and diesel-driven economy over the next 20 years, China has achieved a leading position in related fields to serve as the basis of the country’s economic development and optimization, not merely for the next 5 years but also the next 20 or 30 years.

The article is based on an interview with John Ross, a senior fellow at the Chongyang Institute for Financial Studies. [email protected]

GT Voice: India’s ultra-rich are growing, a worrying sign of inequality

India's rupee Photo: VCG

India’s rupee Photo: VCG

The proliferation of billionaires in India, instead of being seen as a sign of success, serves as a painful reminder of the inequality and disparity that plagues the Indian society.

The latest global rich list released by the Hurun Research Institute has again triggered much discussion about the Indian economy. The list showed that Mumbai, India’s financial capital, has surpassed Beijing as the Asian city with the highest number of billionaires.

Some may attribute the seemingly rosy figure to India’s robust economic performance. However, for a country beaten by Bangladesh in terms of per capita GDP, one couldn’t help but ask: Is the rapid rise in the number of billionaires really a cause for celebration or a worrying economic malaise?

Also, India had the second-largest number of new additions with 84 new members on the latest ultra-rich list, with the ranks of billionaires surging by nearly 45 percent year-on-year to 271. Meanwhile, India’s per capita GDP reached $2,411 in 2022, up about 7.7 percent compared with the previous year, while that of Bangladesh was $2,688, according to World Bank data. 

It is not the first time we’ve gotten a peek into the growing wealth disparity in India’s society behind the shiny economic data. Such a widening wealth gap is also an important reason why we remain uncertain about the development potential of the Indian economy in the long run.

While India’s wealth gap is no longer new to the public, it is still surprising that the country has shown little improvement in reducing the gap over the decades, a manifestation of the difficulties and challenges ahead for the Indian economy. According to a new study by the World Inequality Lab, income and wealth inequality in India are at a historical peak with the richest 1 percent of India’s population holding 40 percent of its wealth.

Moreover, fewer than 10,000 individuals in a population of 920 million adults earn an average 480 million rupees ($5.7 million), more than 2,000 times the average income of $2,800. Nine out of 10 Indians earn less than the average, according to Indian media reports. 

Also, while India is among the world’s largest producers of agricultural commodities, millions of Indians are still starving. India came in at 111 out of 125 countries in the Global Hunger Index released in October 2023, which referred to the level of hunger in India’s population as “serious.” The country, with a population of 1.4 billion, accounts for one-quarter of the world’s undernourished and is home to more than 190 million hungry people.

In the face of the widening wealth gap, the increased number of Indian billionaires suggests that as more resources and wealth are concentrated in the hands of a few, it is harder for ordinary people to share the dividends of economic development. 

This growing gap will cause a series of hidden risks for the Indian economy. First, it will lead to limited consumption potential among the majority of the population, which directly affects market demand and growth momentum. 

Second, wealth inequality could lead to social instability, which not only affects normal economic activities, but also dampens investor confidence. Third, wealth disparity also results in the unequal distribution of education resources, which makes it difficult for the majority of the population to have the chance to improve their standard of living, and the lack of an educated workforce means that India’s demographic dividend could be uncertain.

Social progress and national prosperity are built on the basis of the enhanced wellbeing and sustainable development of the entire population, not a small group. The quality of India’s economic growth cannot be guaranteed by the pursuit of elite wealth alone.

In this sense, while the Indian economy is projected by some to become the world’s third-largest economy by 2027, its economic foundation will be shaky if it continues to ignore the wealth inequality problem.