Targeted measures expected to aid in balancing economic recovery

China is expected to take targeted measures to achieve a steady and balanced economic recovery from the COVID-19 pandemic, economists said.

Liu Ligang, managing director and chief China economist at Citigroup, said on Tuesday: “Citi maintains its forecast that the GDP growth in China will reach 8.8 percent this year. The main drivers for growth will be a catch-up of consumption, a recovery for the services sector and manufacturing investment.”

Consumption may contribute about 6 percentage points of China’s GDP growth for 2021. The growth in manufacturing investment in the country may accelerate to 9.5 percent year-on-year, and China’s export, which maintained strong growth momentum, is expected to increase 12 percent year-on-year in 2021, Liu said.

He applauded China’s efforts to take targeted stimulus measures to deal with the COVID-19 outbreak, rather than using the credit-fueled stimulus approach. Compared with other major economies during the pandemic and its own response to the 2008 global financial crisis, China has adopted relatively moderate and targeted fiscal and monetary stimulus measures this time.

Looking forward, he advised the country to take a prudent attitude toward policy exiting because of an uneven economic recovery. Exiting stimulus measures should not be done too hastily in order to avoid a new round of financial risks.

China’s economic recovery is still uneven. There is relatively fast growth in industrial production and manufacturing. However, growth in the service sector, especially in catering, tourism, and leasing and business services, has not yet returned to the pre-COVID-19 level, said Ding Shuang, chief economist for China and North Asia at Standard Chartered Bank.

“We don’t expect that China will resort to large-scale stimulus to achieve balanced growth. Instead, the country will use targeted measures to support the industries that recover at a slower pace,” Ding said on Tuesday while giving a forecast on the global and Chinese economies in the second half of this year.

GDP growth in China will accelerate to 8 percent year-on-year in 2021, and global GDP growth will rebound to 5.8 percent, he said.

“The country will let consumption play a bigger part in spurring economic growth and let the development of the service sector catch up with the primary and secondary sectors. It is important to achieve balanced growth in terms of both quantity and quality. For example, high-end and low-carbon manufacturing will take a larger share of the manufacturing industry. In regard to the service sector, China is expected to put greater emphasis on the development of modern services, rather than real estate,” he said.

Internal drivers will play a bigger role in consolidating the steady recovery of the Chinese economy in the second half of the year. Investment in manufacturing, consumption in the services sector and goods exports will boost steady economic growth in the coming months, said Chu Jianfang, chief economist at CITIC Securities.

Going forward, macro policies should center around consolidating fundamentals and work more proactively to shore up weak links, including manufacturing investment and consumption, said Zhong Zhengsheng, chief economist with Ping An Securities.

Noting that social financing as well as M2, the broad measure of money supply that covers cash in circulation and all deposits, are likely to grow steadily, monetary policy in the second half of the year is expected to more actively serve the real economy and provide targeted support to weak areas such as smaller and manufacturing businesses, Zhong said in a recent statement.

The country will let consumption play a bigger part in spurring economic growth and let the development of the service sector catch up with the primary and secondary sectors.”

Ding Shuang, chief economist for China and North Asia at Standard Chartered Bank