Li Ke’aobo: China’s Growth Rate Has Basically Returned to a Normal Range
Originally published in Chinese by ACCEPT on December 28, 2020, translated by ACCEPT
As 2021 approaches, the outline of the 14th Five-Year Plan will be announced soon. During the implementation of the 14th Five-Year Plan and beyond, what are China’s prospects for growth and high-quality socioeconomic development?
On December 27, Tsinghua University’s Academic Center for Chinese Economic Practice and Thinking (ACCEPT) and Tencent Finance jointly held a live online broadcast to explore this question. The three-hour event was centered around the theme: The 14th Five Year Plan: A Fresh Start for China and the World.
At the forum, ACCEPT released their new report, Analysis and Forecast of China’s Macroeconomy. The report’s focus is on the beginning of the 14th Five-Year Plan period: reconfiguring economic geography to enhance domestic circulation and readjusting economic and trade relations to open up new space in the international economy.
Li Ke’aobo, Executive Deputy Director of ACCEPT, kicked off the event with a brief overview of his analysis and judgment of China’s current macroeconomic outlook.
He began with a review of the changes in China’s macroeconomic situation over the past year. Despite the significant impact of COVID-19, China is expected to resume a growth rate of 5.5% in the fourth quarter, up from -6.8% in the first quarter. In other words, China’s growth has essentially rebounded to a normal range, mainly due to the rapid resumption of production. In addition, export growth has been another vital factor contributing to this rapid economic recovery.
Li Ke’aobo referenced China’s enormous contributions to the global fight against the pandemic. As COVID-19 began to spread around the world, China leveraged its strong production capacity to export 200 billion masks, and the growth rate of medical equipment exports neared 50%. For “home economy” items such as mobile phones, stereos, and tablets, China’s export growth also jumped much higher than before. Moreover, a large number of foreign trade orders are also flowing back. According to ACCEPT’s field investigations of numerous coastal foreign trade companies, there has been an overwhelming inflow of foreign trade orders such that these companies have had to adopt a system of three rotating shifts to ensure they can meet the demand of overseas markets. Finally, cross-border e-commerce has experienced rapid growth and enjoys worldwide popularity thanks to its openness, low costs, and high efficiency at a time when mass economic activities have been faced with constraints that affect consumption to a certain extent.
An area that has been rather severely affected by the pandemic is weak consumption. The two major reasons for this are declining income growth and a lower propensity to consume for low- and middle-income groups. According to data released by the National Bureau of Statistics, per capita disposable income in the first three quarters of 2020 declined by 0.3% in urban areas. This decline is due to abruptly reduced activity in catering, accommodation, tourism, housekeeping, and other service industries since the outbreak of the pandemic. As a result, numerous service industry employees have lost their jobs and suffered significant reductions in their per capita income. Meanwhile, the shock of the pandemic has caused a fall in the marginal propensity to consume and a rise in the preference for saving. In the first three quarters, the per capita consumption expenditure in urban areas accumulatively decreased by 8.4%—a decline far exceeding that of per capita disposable income.
In his concluding remarks, Li Ke’aobo summarized the main points of the Analysis and Forecast of China’s Macroeconomy, drawing special attention to the reconfiguration of China’s economic geography and the digital economy. He pointed out that China’s per capita GDP has just reached the world average level, which is only one-fifth of that of the United States. At such a historic stage, the Chinese economy still retains a massive amount of demand just waiting to be released—a task which can be accomplished in part by reconfiguring China’s economic geography and facilitating the country’s demographic transition. The transformation of the Chinese economy over the past four decades since reform and opening up has been so drastic that it is roughly equivalent to the magnitude of changes that took place over the preceding 1,500 years. However, shifts in China’s economic geography currently lag far behind changes in the country’s economic growth. Therefore, the report recommends that China should follow the natural laws of socioeconomic development, address institutional barriers, promote the reconfiguration of economic geography, and foster a long-term driving force for China’s growth through large-scale migration. In addition, the digital economy is another growth point for the Chinese economy. In this regard, Li Ke’aobo argues that to maintain China’s relative leadership in the global Internet, China should embrace precisely targeted anti-monopoly supervision rather than a one-size-fits-all approach.
Source: https://view.inews.qq.com/a/20201228A0FHZC00?tbkt=I&openid=o04IBAEV2bvaXKvpxY1_CpCukZOo&uid=
