China’s economic revival to benefit all
The novel coronavirus pandemic has created huge pressure on China’s economy, which has made achieving the goal of building a moderately prosperous society in all respects by the end of this year all the more challenging. But China will make ultimate efforts to create jobs and guarantee people’s livelihood, just as Premier Li Keqiang reiterated at the press conference on Thursday.
Among other things, the Chinese leadership had also planned to increase GDP per capita two-fold by 2020 from the 2010 level.
But to achieve this objective, the economy had to grow at an average annual rate of more than 6 percent, which seems difficult to achieve this year not only because of the impact of the pandemic but also because of the trade war the US launched against China.
Things could have been worse, however, if China had not largely controlled the pandemic at home, and resumed much of its economic activity. Yet China faces another challenge, the challenge of low external demand as the rest of the world is still fighting the outbreak.
So what can China do in this environment? The most important thing for it to do now is to boost domestic consumption. China is less reliant on external demand today than in the recent past, because it has helped build a huge middle-income group that can consume an even bigger proportion of its production. This internal demand, especially in the countryside, needs to be boosted further in order to realize the goal of eradicating abject poverty by the end of this year.
And to realize the twin goals of eradicating poverty and revitalizing the countryside, China should adopt a combination of policies — a general one to bolster agricultural production and create more channels for rural residents to find employment and increase their incomes, and a focused one to help households, especially those facing severe financial problems or having physically disabled members or living in remote areas, which cannot benefit from the general policy. For the second group, the authorities should provide it with direct subsidies and handouts so they are not “left behind”.
Besides, those rendered jobless due to the impact of the outbreak require special attention. They can, for example, be provided with temporary employment to ensure they do not slip into poverty. Creation of jobs through the efforts of all levels of governments, and granting subsides for companies that employ people who have lost their jobs due to the outbreak should be one way of achieving that goal.
The Government Work Report presented by Premier Li Keqiang to the National People’s Congress, China’s top legislature, on May 22 gives a good idea about how to achieve those goals.
First, by not setting a specific economic growth target for this year, the government has created ample room for introducing policies that can be adjusted according to the changing situation, especially given the challenges facing the world economy.
Second, as the report says, the government will pursue a more proactive fiscal policy and the fiscal deficit this year will be about 3.6 percent of GDP. Which suggests monetary policy could be used in a flexible and appropriate way to ensure adequate money supply and aggregate finance’s growth at notably higher rates than last year.
Third, the report says reform will be deepened and development of social programs boosted to safeguard and improve people’s living standards, particularly by strengthening the public health system and enhancing the quality of education.
In particular, promotion of higherstandard opening-up and liberalization, and facilitation of trade and investment deserves special mention. At a time when some Western countries have resorted to protectionist policies, China has set an example by promising to further open up its economy to the outside world, not least because these Western governments’ policies will isolate their economies and thus deal another blow to the world economy.
It should be noted that China achieving its development goals will be beneficial for the rest of the world too. China has been the main engine of global economic growth over the past 15 years or so. And as the first country to recover from the novel coronavirus pandemic, China should continue to play that role, especially given the dire state many Western countries are in now because of their leaders’ failure to contain the outbreak. The world needs China now more than ever, because a stronger Chinese economy will benefit the rest of the world.