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Experts envision China’s economic outlook

Author  :  WANG CHUNYAN     Source  :    Chinese Social Sciences Today     2021-04-09

Experts exchanged ideas and policy suggestions on China’s macro economy over the 14th Five-Year Plan period (2021–25) at a webinar on March 19.

The webinar was co-hosted by the Academic Division of Economics at the Chinese Academy of Social Sciences (CASS) and the JD Group.

Policy adjustments

CASS Vice President Gao Peiyong expounded on China’s three major macroeconomic policy adjustments for 2021. First, the country's macroeconomic policy is returning to a normalized pattern.

In addition, issues relating to enterprises' safety and development have been raised to unprecedented heights, Gao said. Only by safeguarding enterprises and operations of market entities can we ensure security in employment and basic living needs, and the economy’s foundation.

Moreover, coordinating development and security has become an increasingly important consideration for macroeconomic policies, Gao said.

Cautiously optimistic

Li Yang, director of the Academic Division of Economics at CASS, pointed out that the International Monetary Fund is optimistic about the global economy in 2021, but on the premise of having the pandemic under control, strong public investment, and liquidity supported by central banks.

Improvement of the world’s economic situation is conducive to the recovery of the global industrial chain, supply chain, and value chain. For the Chinese economy in 2021, it means both challenges and opportunities, Li continued. To meet the challenges, China will need to fully implement the dual circulation strategy in 2021 and for a long time to come, which smooths domestic circulation and lets domestic and international circulations reinforce each other.

“In short, we should be cautiously optimistic about China's economic growth,” Li said.

The Government Work Report set this year's GDP growth target at more than 6%. This is based on scientific and rational consideration, while leaving some room for improvement, Li observed. In the process of economic development, great attention should be paid to debt risks. The management and control of government debt risks will be one of the main tasks of macro-economic control.

JD Vice President Shen Jianguang analyzed the stimulus policies of various countries, especially those of the United States, shedding light on the overseas challenges for China’s economy. Shen concluded that economic and trade relations are the ballast stone of China-US relations, and still have strong vitality. This is mainly reflected in the fact that China has become the largest importer of US goods, and China's exports to the US have also seen very strong growth.

Changing dynamics

Wang Xin, head of the research bureau at the People’s Bank of China, said that carbon neutrality has an important impact on industrial transformation. The transformation of the industrial structure and energy structure will reshape industrial competitiveness and geopolitical structures of various countries. Green trade and investment barriers will increase, and trade and investment frictions and disputes may intensify in certain countries. These changes will have a profound impact on the global economy, and it is necessary to formulate countermeasures as early as possible.

The current macroeconomic situation and the internal logic of macroeconomic policies have changed, said Liu Shangxi, president of the Chinese Academy of Fiscal Sciences. Economic digitization and financialization are overlapping, which propels economic operations from a physical state to a virtual state. The original definitions, operating characteristics, and influence mechanisms of currency and debt are not sufficient to explain and understand current problems. Therefore, it is necessary to rethink fiscal, financial, and even macroeconomic issues, especially the issues of expectations and risks, in conjunction with changes in the macro environment.

He Dexu, director of the National Academy of Economic Strategy at CASS, analyzed the fiscal and financial situation. In light of increasing external shocks, China's financial industry is more susceptible to interference, with more prominent vulnerability. The international financial market’s turbulence will eventually be transmitted to the Chinese market.

In addition, debt risk issues such as implicit debt, corporate credit debt default, and real estate corporate debt are becoming increasingly complicated. The reason may be that the leverage ratio is too high, He Dexu noted.

Moreover, due to the compounding impact of the pandemic and the economic downturn, commercial banks’ asset quality problems have been exposed. In the process of economic recovery, non-performing assets of commercial banks may further increase.

In order to achieve the goals of the 14th Five-Year Plan, it is necessary to deepen supply-side structural reforms, establish an effective system for expanding domestic demand, while unswervingly expanding opening up, said Zhang Wei, vice president of the Chinese Academy of International Trade and Economic Cooperation at China’s Ministry of Commerce. With domestic circulation playing the leading role, Zhang suggested improving the efficiency and level of domestic circulation by making use of international circulation. As such, the two can reinforce each other.

The current macroeconomic situation and the internal logic of macroeconomic policies have changed, said Liu Shangxi, president of the Chinese Academy of Fiscal Sciences. Economic digitization and financialization are overlapping, which propels economic operations from a physical state to a virtual state. The original definitions, operating characteristics, and influence mechanisms of currency and debt are not sufficient to explain and understand current problems. Therefore, it is necessary to rethink fiscal, financial, and even macroeconomic issues, especially the issues of expectations and risks, in conjunction with changes in the macro environment.

He Dexu, director of the National Academy of Economic Strategy at CASS, analyzed the fiscal and financial situation. In light of increasing external shocks, China's financial industry is more susceptible to interference, with more prominent vulnerability. The international financial market’s turbulence will eventually be transmitted to the Chinese market.

In addition, debt risk issues such as implicit debt, corporate credit debt default, and real estate corporate debt are becoming increasingly complicated. The reason may be that the leverage ratio is too high, He Dexu noted.

Moreover, due to the compounding impact of the pandemic and the economic downturn, commercial banks’ asset quality problems have been exposed. In the process of economic recovery, non-performing assets of commercial banks may further increase.

In order to achieve the goals of the 14th Five-Year Plan, it is necessary to deepen supply-side structural reforms, establish an effective system for expanding domestic demand, while unswervingly expanding opening up, said Zhang Wei, vice president of the Chinese Academy of International Trade and Economic Cooperation at China’s Ministry of Commerce. With domestic circulation playing the leading role, Zhang suggested improving the efficiency and level of domestic circulation by making use of international circulation. As such, the two can reinforce each other.

Editor: Yu Hui

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