China's economy

发布时间:2021-09-30 15:19:06    来源于:CBF


China's economy roars ahead as engine for global growth

China's economic indicators for the first quarter of 2021 have been released. At an annualized rate, the economy grew 18.3% from January through to April, facilitating a complete economic recovery as the world deals with the disruption of COVID-19, and consumption reasserts itself, registering the highest tally since 1993. 

In line with the GDP figures, industrial output increased 24.5% from last year, exports by 38.7%, imports 29.2%, retail sales of consumer goods 33.9%, and fixed-asset investment by 25.6%, all positive indicators showing a healthy and resilient economy, which is forecast to end the year up around 8.4% as a whole. 

The impressive resurgence of China's economy is the product of a stable internal environment facilitated by rapid and sustained containment of the COVID-19 pandemic, supply chain resilience and other matching rebound of other major economies. 

Irrespective of geopolitical uncertainties, China continues to remain an engine of global growth and subsequently an integral part of the world recovery. This illustrates why it must continue to promote the country's economic and development strategies, as well as setting a firm example in how to recuperate one's economy in the midst of crisis. 

First of all, China's recovery must be premised on its absolutist and strident pandemic prevention and control strategy, one which has protected national stability and prevented a massive resurgence of the virus. This has certainly paid off. 

A year ago, China suffered a temporary economic hit of 6.8% following the first national lockdown, but through wholesale population spanning testing, strict quarantining and uncompromising transport curbs, the outbreak was quashed and normal life was enabled to resume. 

Since that time, there have been small new pockets of new virus cases in some provinces, but by aggressively enforcing this strategy on a localized scale, China has completely prevented a "second wave" altogether unlike other countries that have been beset again and again. 

This has produced a climate of consistent stability, and given China a head start over the rest of the world on reopening its economy. This, in turn, has allowed China-based supply chains to remain resilient and stable, providing the rest of the world with medical supplies, equipment and now vaccines. 

These circumstances allowed China to ride out a global recession in achieving 2.3% GDP growth in 2020, being the only major economy in the world to do so. Of course, the global economy is interdependent and, in line with this, the recovery in some other countries subsequently drags up China's growth faster as demand for consumer goods pushes up exports.

This has been particularly true in nations such as the United States where, despite geopolitical tensions, mutual trade has nonetheless surged. In line with this, a facilitation of normal economic circumstances within China itself also has produced a rebound in local consumer demand and thus a surge in imports, promoting international recovery.

A rolling cycle of global recovery has emerged, with China is at the center adding to its momentum. This sets China's economy on an incredible pace for 2021. Of course, this is not without its risks. Things are slightly positive right now, but there is no absolute guarantee the COVID-19 pandemic will completely disappear. While the scenarios in some countries look positive, others continue to be rocked by their highest ever tallies of cases, plunging recovery into uncertainty.

Likewise, constant new mutations of the virus are going to be an ongoing problem for emergent vaccines to keep up with. This will make the global exit from the pandemic not black and white, but patchy and sometimes inconsistent. 

In this case, while the picture is optimistic, the struggle is far from over. However, one thing is certain, and that is China's recovery is simply a scale of "how high?" as opposed to any fear of falling backwards. 

China will continue to use proactive measures to support economic growth with an eye on fiscal sustainability, while leaving enough policy room to address challenges and promote reforms, a top government official said in a written article.

Finance Minister Liu Kun said in his article, published in People's Daily, that the efforts would be focused at keeping fiscal deficit, gross debt and government expenditure at reasonable levels, without any sharp shifts in policies.

The minister's comments came ahead of the release of the major economic indicators for the first quarter. Many economists had projected a robust recovery as manufacturing activity and services gathered speed, largely due to the successful containment of COVID-19 and fast vaccination.

Liu called for strengthening research and analysis of the macroeconomic situation, and using more policies to hedge potential challenges. In this regard, the minister highlighted the need to inject more funds in sectors like technology innovation and improving the tax income system for local governments.

Consumption tax collection reforms will be stepped up to further expand the income avenues for local governments. Stamp tax and tariff legislation will also get due attention from the country along with an expansion of the tax management rights of provincial-level governments, said Liu.

In order to mitigate the pandemic impact, China has made greater use of public investment, in addition to providing relief for households and businesses, to support the recovery soon after the epidemic was brought under better control.

Yi Gang, governor of the People's Bank of China, the central bank, welcomed the re-establishment of the Sustainable Finance Study Group, which was upgraded to a working group co-chaired by the PBOC and the US Department of the Treasury, according to a statement released on the bank website.

The PBOC governor also expressed his support for the new allocation of SDRs and urged G20 members to channel the instruments to benefit low-income countries in an appropriate manner. Yi also called for IMF governance reform under the 16th General Review of Quotas.

The group is expected to develop a G20 sustainable finance roadmap, as well as improve sustainability reporting, identify sustainable investments, and align international financial institutions' efforts with the Paris Agreement.

The G20 finance ministers and central bank governors are also expected to hear from the Financial Stability Board about how regulatory, supervisory and oversight frameworks address the so-called "global stablecoins", and have broad discussions on the cross-border use of central bank digital currencies and their wider implications for the international monetary system, the communique said.

Industrial production in China has returned to pre-COVID-19 levels amid efforts to revive economic activity and the renewed confidence of enterprises, the Ministry of Industry and Information Technology said.

Huang Libin, a spokesman for the ministry, said that during the first three months of this year, the utilization rate of industrial capacity in the nation reached 77.2 percent, the highest for the same period since 2013.

According to Huang, industrial output increased 24.5 percent on a yearly basis in the first quarter, while profits of industrial enterprises jumped 1.79 times on a yearly basis in January and February, with the vitality of enterprises getting a further boost.

"As the economy continues seeing a steady recovery, major industries are gradually overcoming the impacts of the epidemic, and the scope of recovery continues to expand," Huang said.

In the first quarter, 40 of the 41 major industrial sectors achieved year-on-year growth, the spokesman said.

Huang said rising commodity prices had an impact on the manufacturing industry, but the effect has been controllable. Joint efforts with relevant departments will be made to stabilize the prices of raw materials and prevent panic purchases or stockpiling.

The strong data came after China took a series of measures to revive industrial production and encourage consumption.

Liu Wenqiang, deputy head of the China Center for Information Industry Development, a Beijing-based think tank, said though there have been increases in international commodity prices, its impact on China's sprawling industries will be limited, given the nation's strong industrial capacity and relatively sound industrial system.

According to him, more efforts are needed to fuel the recovery of the services sector and small enterprises, as they are still facing difficulties while employment pressure persists for some rural migrant workers and young job seekers.

The ministry said it is drafting the manufacturing development plan for the 14th Five-Year Plan period (2021-25), which will include goals for the overall development of the manufacturing industry, efforts to boost industrial fundamental technological innovation and initiatives for cultivating strategic industries such as raw materials of major technical equipment.

The ministry said it will carry out a special plan to fight unfair competition in the internet industry, with a focus on rectifying malicious blocking, traffic hijacking and other behaviors that disrupt market competition.

China's foreign trade will maintain upward momentum in the first half of 2021 after experiencing strong export performance between January and March, officials and experts said on Tuesday.

Driven by robust demand due to the rapid recovery in major economies, China's foreign trade amounted to 8.47 trillion yuan ($1.29 trillion) in the first quarter of this year, up 29.2 percent year-on-year, according to the latest data released by the General Administration of Customs.

The substantial trade figures are partly due to the low base from the first quarter of last year, when China's foreign trade was hit by the COVID-19 pandemic, Customs spokesman Li Kuiwen said.

"Yet even compared with the same period in 2018 and 2019, the country's foreign trade in the first quarter still saw an increase of 25.3 percent and 20.5 percent, respectively," he said.

With the manufacturing purchasing managers index in major economies further improving in March, the official predicted that overseas economic recoveries will continue to accelerate and support China's exports.

The country's exports soared 38.7 percent on a yearly basis to 4.61 trillion yuan in the first quarter, while its imports jumped 19.3 percent year-on-year to 3.86 trillion yuan. Its trade surplus surged 690.6 percent year-on-year to 759.29 billion yuan, Customs data showed.

Since the second quarter of last year, China's innovative foreign trade policies, in the face of the impact of pandemic, have continued to work. The government policies have played a vital role in cutting costs, preventing risks and expanding the market for its export-oriented companies, said Yu Yi, a spokesman for the Beijing-based China Council for the Promotion of International Trade.

Thanks in part to the soaring demand for goods in markets in the European Union and the United Statesboosted by their governments' fiscal stimulus measuresthere was significant growth in China's exports in the first quarter of 2021, with those to the EU rising 36.4 percent year-on-year and exports to the US surging 61.3 percent on a yearly basis.

The outlook for China's exports, advanced by vaccine availability and stimulus policies globally, will remain positive this year, with new business models such as cross-border e-commerce emerging as a new engine of the country's foreign trade, said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

Foreign trade through cross-border e-commerce channels surged 46.5 percent on a yearly basis to 419.5 billion yuan in the first quarter, Customs data showed.

Experts said that while China's foreign trade will continue to climb in the second quarter, its overall growth rates could slow down. The recovery of overseas manufacturers, together with high global commodity and material prices, and the lagging effect of yuan appreciation, will put pressure on China's exports in the second quarter of this year.

With the easing of the pandemic and vaccinations becoming the norm throughout the world, overseas demand for medical supplies, daily necessities and work-at-home goods, such as laptops, will fall, while the recovery of other emerging economies' supply capacity will also affect China's exports and some orders may be diverted to other countries, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges.

China's trade with the Association of Southeast Asian Nationsits largest trading partner, jumped 26.1 percent year-on-year to 1.24 trillion yuan from January to March, while its exports and imports with 14 trade partners of the Regional Comprehensive Economic Partnership grew 22.9 percent year-on-year to 2.67 trillion yuan, accounting for 31.5 percent of its total foreign trade volume.