Outlook bright and stable as China spends big
China's slowdown may have spawned pessimism around the world, with predictions of a new round of "China doom and gloom," but the real picture in China's shopping malls, cinemas, restaurants and job market is anything but downbeat. There are few at home who foresee anything but sound, stable growth in 2016. Creating jobs and keeping the job market healthy is a top government priority.
The National Development and Reform Commission's Zhao Chenxin told reporters Wednesday that the economy will maintain a medium-to-high growth this year, a solid base for a steady job market.
He said large-scale unemployment is not an expected byproduct of economic restructuring, thanks to sound economic fundamentals and new growth engines. The registered unemployment rate in China's cities was 4.05 percent at the end of 2015, and China created 13.12 million new jobs for urban residents last year, both bettering official targets. Meanwhile, consumer and producer price indices released Thursday also showed encouraging signs of stability in the economy. China's consumer prices rose for a third consecutive month in January thanks to rising food prices, signaling easing of deflationary pressure.
During the recent Lunar New Year holiday, a mini-boom demonstrated how little pessimism is evident in the real economy, with plenty of spending on presents, entertainment, tourism and travel. Statistics by the Ministry of Commerce showed that from Feb 7 to 13, revenue of retailers and restaurants in China hit 754 billion yuan ($116 billion), up 11.2 percent on the comparable period last year.
From Feb 8 to 13, Chinese cinemas took 3 billion yuan, up 67 percent. The first day of the Lunar New Year was China's best day ever at the box-office, with cinemas raking in a record 660 million yuan from 19 million moviegoers. According to China UnionPay, source of almost all bank card transactions on the Chinese mainland, the number of people buying dinner with cards rose by six percent, with each dinner costing around 585 yuan.
According to the National Tourism Administration, tourism revenue during the Lunar New Year holiday was 13.8 billion yuan, up 14.2 percent from last year. Around 6 million people travelled abroad. "Consumption in China... has shown remarkable resilience despite cyclical weakness and asset price volatility," said China International Capital Corporation (CICC) in a report.
In 2015, consumption generated roughly two thirds of GDP, up from just over a half in 2014. CICC expects the growth of consumption to be relatively resilient with household incomes continuing to expand in the near term.
Reform and innovation remain the anointed choices of the government to lead the economy down a sustainable, long-term path. Companies can expect government support as they upgrade their technology, products and business models and reduce their debt. A wide range of measures for emerging businesses include financial support, business parks and less red-tape.
These efforts have already paid off. An undeniable wave of innovation and entrepreneurship has swept the nation. The number of newly-registered enterprises hit 4.4 million in 2015, up 21.6 percent. Of course, the picture is not entirely rosy. There is certainly no shortage of difficulties and challenges ahead, most notably severe structural overcapacity.
"For the government, how to manage a soft landing and find new sources of growth via structural reform and counter-cyclical economic policy is a challenging task," said Zhu Haibin, J.P. Morgan China chief economist, in a note. Zhu expects growth to come from technological innovation, industrial upgrades, economic openness and expanded urbanization that will inevitably result from land and household registration reform.
An inside view of a car assembling factory.