Nation to remain key engine for global economic growth, say experts

China is likely to register strong economic recovery this year, amid macroeconomic policy adjustments and unwavering reform and opening-up efforts characterized by aligning with high-standard international trade and economic rules, establishment of a national unified domestic market and the nurturing of new productive forces, said senior economists, trade experts and business leaders.

They also believe the country will remain a key growth engine for the global economy in the coming decades thanks to its sound longterm economic fundamentals, bringing golden business opportunities for foreign investors.

They made the remarks while dismissing views expressed in the Western media that suggested that China’s economic prospects were worsening and that the country was reluctant to reform.

In an exclusive interview with China Daily, Justin Yifu Lin, dean of Peking University’s Institute of New Structural Economics, said that China has the potential to grow at 8 percent annually in the coming decades. The Chinese economy can grow beyond 5 percent this year, if the government adopts more proactive fiscal and monetary expansion policies to stimulate domestic investment and consumption, he said.

“China will still be the most dynamic growing economy, make the most contribution to global growth, provide driving force for global growth and stability,” said Lin, who is also vice-chairman of the Committee on Economic Affairs of the National Committee of the Chinese People’s Political Consultative Conference, China’s top political advisory body.

The country is capable of adopting more proactive countercyclical fiscal and monetary policies, and providing more resources for private enterprises — the main players in China’s foreign trade sector — to offset the impact of global economic slowdown and falling external demand, and boost domestic investment and consumption, said Lin, who is also former senior vice-president and chief economist of the World Bank.

He said that Japan abandoned its industrial policy under external pressure and failed to achieve major breakthroughs in basic research and technologies after the late 1990s, which is exactly what China should avoid while boosting investment and productivity.

The economist said that China is unlikely to experience what Japan did as long as it promotes technological innovations and industrial upgrades and creates more investment opportunities for enterprises.

Wei Jianguo, former vice-minister of commerce, said that China is expected to announce more measures to deepen reforms and expand high-level opening-up during the upcoming two sessions, the annual gatherings of the nation’s top legislative and political advisory bodies, to boost the confidence of all enterprises and fuel economic growth.

“Key measures are expected to include those accelerating the establishment of the unified domestic market, facilitating the development of new productive forces and enhancing the talent education system,” he said. With innovation leading, new productive forces mean advanced productivity freed from traditional economic growth models.

He called for new policies to remove invisible barriers to regional markets and improve logistics efficiency while reducing the cost to form a unified market in China, which he said should be aligned with high-level international standards and encourage fair and full competition. This will provide a more enabling business climate for both domestic and foreign enterprises.

He said that China is on a fast track to upgrade industrial and supply chains with green, digital and intelligent transformations, as it has prioritized nurturing new productive forces. The key is to establish as soon as possible a unified and open technology factor market with orderly competition, complete systems and sound governance, he added.

“The consumption boom during the recent Spring Festival holiday demonstrated the resilience of the Chinese economy. Its capability to attract foreign investors, especially in the high-end and green sectors, is set to increase as the country’s economic recovery is picking up steam, while it continues to downsize the negative list for foreign investment and promotes highquality development,” Wei said.

Tian Xuan, vice-dean of the Tsinghua University PBC School of Finance, said that China’s fast economic expansion with an average annual growth rate of 9.9 percent over the past three decades was a miracle. However, it is normal that a large economy such as China will not always register such high growth rates.

“China’s growth rate last year — 5.2 percent — already beat many economies far smaller than it,” Tian said.

Tian said he expects the Chinese economy to expand by 5 percent this year, as the scarring effect of the COVID-19 pandemic further fades and policy measures aimed at boosting confidence, supporting the private economy and stabilizing the real estate sector deliver more solid effects.

He said the country has ample room for macroeconomic maneuver, including adopting more expansionary fiscal and monetary policies.

“It is true that quite a group of local governments and enterprises, especially property developers, are burdened with debt, but the central government’s debt is quite low compared with international standards, leaving enough room for China to take on more central government debt and generate demand via government investment,” said Tian, who is also a deputy to the 14th National People’s Congress, China’s top legislature.

“Balance sheet expansion of the central bank — that is, buying more assets — can also be an option for China to stabilize the capital market,” he said, adding that the start of drafting a law on promoting the private economy will also bolster the sector’s confidence and spur private enterprises’ contributions to the overall economy in terms of innovations, employment and tax incomes.

Xu Gao, chief economist at BOC International, said that China’s economic performance in 2024 will likely be better than that of last year.

“The government is likely to roll out more policy measures to safeguard traditional growth drivers, especially real estate, to ensure the stable fundamentals of the Chinese economy,” Xu said, adding that he believes the Chinese economy will realize relatively high-speed growth as well as its high-quality development goals, on a solid base of stable economic fundamentals and emerging new productive forces.

Xu also said China is fully capable of avoiding the pitfalls faced by Japan, because China is much better off than the Japan of the 1990s in terms of macroeconomic maneuver capability and policy adjustment room, despite similar challenges like tepid demand and wavering market confidence amid lingering real estate downturn.

Multinational companies have recently reiterated their confidence in the Chinese economy and their development prospects in the country.

Marc Horn, president of Merck China, said that in 2024, the company will continue to expand its footprint in China and seize the vast opportunities that lie ahead.

“As a multinational company that operates in more than 10 cities in China, Merck benefits from China’s significant advancements in streamlined administrative procedures, market access expansion and intellectual property protection, all of which have led to a more open and vibrant Chinese market,” he said.

“In the mid-and-long run, I am optimistic that China’s economy will largely benefit from the current ongoing economic reforms, which targets a Chinese path to modernization driven by industrial upgrading, high-tech development, and green initiatives,” he added.