A WAVE IN MOTION
China continues to drive growth while addressing pressing issues
The Chinese economy possesses both the potential and ability to maintain its upward momentum. This is the core message conveyed by the Central Government’s newly released work plan.
China aims to achieve a GDP growth rate of around 5 percent for 2024, Premier Li Qiang announced when delivering the government work report at the opening meeting of the Second Session of the National People’s Congress, the country’s top legislature, on March 5. The projected goal is the same as that set in last year’s government work report. Said report is the country’s most important annual policy document, summarizing achievements made in the past year and outlining a wide range of economic and development tasks for the coming 12 months.
In 2023, China’s GDP surpassed 126 trillion yuan ($18 trillion), an increase of 5.2 percent, ranking China among the fastest growing major economies in the world. GDP matters because it gauges the size and health of an economy within a certain period.
“Last year, China contributed 30 percent of the global GDP growth and the country remains a real engine of global economic growth,” Xu Hongcai, Deputy Director of the Economic Policy Commission at the China Association of Policy Science, told Beijing Review.
Considering China’s longrange objectives through 2035, where the country seeks to double its economic aggregate or percapita income compared with 2020 and become a mid-level developed country, “it is essential for the country’s economy to maintain a growth rate of around 5 percent,” Zhang Jianping, Deputy Director of the Academic Steering Committee of the Chinese Academy of International Trade and Economic Cooperation, told Beijing Review.
The 2024 targets and more
The growth target of around 5 percent was set against the backdrop of global economic growth lacking momentum and regional hotspots continuing to erupt, which, in turn, make China’s external environment more complex, severe and uncertain, according to the latest work report.
Additionally, the foundation for China’s sustainable economic recovery and growth is not yet solid enough, as evidenced by a lack of effective demand, overcapacity in some industries, low public expectations, and many lingering risks and hidden dangers. Plus, domestic economic flows are experiencing blockages, and the global economy is affected by disruptions, it read.
Still, experts remain optimistic about China’s economic development. Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, told Beijing Review that this year’s economic growth target came with a series of measures and policy support and he is confident it will be realized.
For example, ultra-long special treasury bonds will be issued starting this year and in each of the next few years, with their proceeds to be used to implement major national strategies and build security capacity in key areas, the work report said, adding 1 trillion yuan ($139 billion) of such bonds will be issued in 2024. Ultra-long bonds generally mature over a period of more than 10 years, according to a report by state broadcaster China Central Television on March 6.
With the issuance of ultra-long special treasury bonds and other measures, “I also expect the growth rate to exceed 5 percent in 2025,” Zhang Yansheng said. Several successive years of growth over 5 percent would allow the Chinese economy to recover from the impact of the COVID-19 pandemic, ensuring its performance within a reasonable range and signifying a return to normalcy for the economy.
The work report underscored that the country should continue to pursue higher-quality economic growth and increase economic output accordingly. This means energy consumption and carbon dioxide emissions per unit of GDP will be reduced, Xu said.
With technology continuously evolving, hi-tech industries are poised for substantial growth, their efficiency is increasing, and the consumption of traditional energy sources such as coal is declining, leading to a big reduction in carbon emissions and fostering green development, he told Beijing Review.
However, a substantial improvement in quality still needs the support of overall economic volume. “Our economic growth must maintain a certain pace to ensure steady performance. On this basis, quality, hitech and service-oriented innovation needs to be advanced in a sustainable and stable manner in the long term,” Zhang Jianping explained.
A basket of initiatives
The work report called for efforts to modernize the industrial system and develop new quality productive forces at a faster pace.
The “new” refers to innovationled and the “quality” underlines high quality, according to Zhang Yansheng. “In developing new quality productive forces, we need to increase efficiency in the allocation of production factors, deepen reform and opening up, enhance education and innovation, and make good use of China’s mega market,” he said.
Zhang Jianping emphasized the transformation and upgrading of traditional industries. For example, he said, the consumer market is embracing the transformation to energy saving and emission reduction in the traditional home appliance industry.
He also called for the development
of future-oriented i ndustries such as artificial intelligence. “Some developed regions have an excellent foundation in human resources, industrial structure and business environment, such as the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta and the Beijing-TianjinHebei region. They should lead the nation in proactively strategizing for future-oriented industries,” he added.
The experts also underlined the importance of stimulating the vitality of business entities, including state-owned enterprises, private businesses and foreign-funded companies.
“Enterprises, as the primary entities of innovation, play a pivotal role in cultivating new quality productive forces. So we must create a world-class business environment for them, especially a level ground for competition among all three types of enterprises,” Xu elaborated, adding “we need to encourage and reward innovation.”
“It is essential to treat all these entities impartially and promote fair competition. Otherwise the market will be prone to distortion,” Zhang Yansheng said.
“Special emphasis must also be placed on the protection of intellectual property rights so that enterprises and entrepreneurs can envision potential investment returns in the future,” Zhang Jianping said.
The experts also emphasized the focus on enhancing the role of investment and exports in driving the economy. These two, plus consumption, are defined as China’s three major growth drivers.
“There are many industries with huge consumption demand where investment opportunities are ample,” Xu said. Examples thereof are the “silver economy,” an economy that provides products and services for seniors, the digital industry and intelligent manufacturing.
“With the issuance of ultra-long special treasury bonds and other supportive policies, this year’s investment will be larger than last year’s,” Zhang Yansheng added.
Zhang Jianping said stronger policies are needed to encourage foreign trade enterprises to develop their own brands and intellectual properties. Additionally, Chinese companies should participate more actively in high-quality cooperation under t he Belt and Road Initiative (a China-proposed initiative to boost connectivity along and beyond the ancient Silk Road routes) and better leverage the Regional Comprehensive Economic Partnership (a free trade agreement between the 10 ASEAN member states, China, Japan, the Republic of Korea, Australia and New Zealand) and other bilateral and multilateral free trade agreements. These companies should also make full use of the role of free trade zones (zones effectively facilitating foreign investment in China) to stabilize and upgrade the country’s foreign trade, he concluded.