Nation ‘must make good use’ of strengths to spur growth
China’s vast industrial scale, huge market demand, human capital, growing strength in innovation and strong external economic ties remain a bright spot for the economy, according to Beijing’s leading think tank, even as weak private and foreign investor confidence undercut its post-Covid recovery prospects.
In a 4,300-word analysis published on the theory page of the official People’s Daily newspaper, the Development Research Centre of the State Council said the country still had advantages to help its further development.
“Making good use of those advantages will not only support improving China’s economic fundamentals, but also serve as an important basis for solving problems occurring in the development process,” it said yesterday.
The comment follows April’s lower-than-expected economic data, which led Japanese investment bank Nomura to cut its fullyear growth estimate for the country from 5.9 to 5.5 per cent.
The Beijing-based government think tank hailed China as “a stabiliser” of international trade and pointed to its economic ties becoming more solid.
“China’s long-term social stability, numerous investment opportunities and substantial returns on investment make it a strong attraction for companies from all countries,” it said.
The world’s second-largest economy is trying to lure foreign investors with its large consumer market despite the April data raising doubts over domestic demand.
Continued investigations into US due diligence firm Mintz Group and American consultancy giant Bain & Company, as well the ban on US chip maker Micron, have also raised questions about the post-Covid era business climate.
The think tank listed how the country’s more than 100 advanced manufacturing clusters and skilled workforce could help foreign companies make competitive and cost-effective products for international markets.
It also listed the upbeat domestic consumption power of over 400 million middle-income groups, untapped rural demand and new energy consumption driven by a commitment to carbon reduction.
In a separate editorial published on Saturday, the state Xinhua News Agency rejected overseas criticism, saying that China would continue to welcome more foreign investors.
China has helped companies including US electric vehicle maker Tesla and British-Swedish pharmaceutical and biotechnolgy company AstraZeneca expand their production, the editorial said.
It has also hosted a range of investment promotion events since this year, in contrast to Washington’s crackdown on Chinese technology companies.
However, concerns remain over future growth. Foreign companies are diversifying their supply chains and relocating elements to Southeast Asia and elsewhere to guard against political risk.
At the same time, the country reported a record-breaking youth jobless rate in April and almost zero growth in consumer prices, which suggests a deflation risk.
Foreign direct investment also fell by 3.3 per cent, year on year, in the January-April period, while revenue from personal income tax dropped by 2.4 per cent in the first four months of 2023.
The official purchasing managers’ indices for May are due to be released today, both of which are leading indicators of economic activity in manufacturing, services and construction.