BEIJING, March 25, 2023 /PRNewswire/ — Over the past three years, China has weathered several COVID-19 waves with massive vaccination drive. This has enabled the country to maintain the world’s lowest rates of severe illness and mortality.
In response to the constantly evolving situation, China has optimized its COVID-19 response strategy by coordinating epidemic prevention and control with economic and social development.
In early 2023, China’s economy is showing positive signs, with several developments suggesting its capacity to drive global growth.
Data from the National Bureau of Statistics (NBS) shows that China’s value-added industrial output, a crucial indicator on the supply side, increased by 2.4 percent year on year in the first two months of 2023.
On the demand side, key metrics for consumption, investment and foreign trade rose during the same period. Retail sales of consumer goods and fixed-asset investment increased by 3.5 and 5.5 percent, respectively.
Steady economic growth
As consumer confidence is gradually restored and pro-consumption policies take effect, the NBS expects the revival of consumption to continue.
To stimulate domestic consumption, the government has rolled out supportive policies nationwide, including issuing purchase vouchers to the public and launching consumption promotion festivals.
China continues to put emphasis on high-quality development, including prompting the real economy, advancing high-end manufacturing and accelerating the construction of a modern industrial system, according to the State Council.
The country is targeting steady economic growth and has set the gross domestic product (GDP) target at approximately 5 percent.
Despite the rebound in the first two months of this year, China still needs to encourage consumer spending and strengthen the foundation for sustainable economic recovery, said NBS spokesperson Fu Linghui during a press conference last Wednesday.
Starting from March 27, the People’s Bank of China will reduce the reserve requirement ratio (RRR) for financial institutions (excluding those already implementing a 5-percent ratio) by 0.25 percentage points. After the reduction, the weighted average RRR for lenders will drop to around 7.6 percent.
The move is designed to maintain a reasonably ample amount of liquidity to serve the real economy and provide financing support to stimulate domestic demand.
Stable growth amid difficulties
China’s economy has maintained stable growth amid the resurgence of COVID-19 in the past year.
According to the NBS, the country’s GDP hit an all-time high of 121 trillion yuan (about $17.95 trillion) in 2022, after surpassing the thresholds of 100 trillion yuan in 2020 and 110 trillion yuan in 2021.
Meanwhile, value-added industrial output rose by 3.6 percent year on year. Notably, the high-tech manufacturing and equipment manufacturing sectors showed significant growth momentum with the output values increasing by 7.4 percent and 5.6 percent, respectively.
Despite multiple challenges over the past three years, China has maintained stability in its economy. It was one of the first countries in the world to resume work and reopen businesses in 2020 and was the only major economy to attain positive growth that year.
“China has been working on minimizing the impact of the pandemic on its supply chains and business operations,” said Professor Liu Bin at the China Institute for WTO Studies under the University of International Business and Economics in Beijing.
To stabilize economic growth, China has implemented several policies, including mobilizing funds for infrastructure investment, reducing utility costs for market entities, and providing assistance to companies severely impacted by the pandemic to help ease their financial burdens.
According to Liu, the rebound in China’s economic growth is expected to be faster than in the international market, which is important for boosting confidence in the global economic recovery.
Due to China’s large role in global trade, its economic recovery could inject vitality into the global economy, said Liu.
Data from the General Administration of Customs shows that China’s total trade in goods reached 42.07 trillion yuan (about $6.21 trillion) in 2022, ranking first globally for a sixth consecutive year.
In addition, official data shows that China has led the world in exports for 14 consecutive years, taking up 14.7 percent of the global export market.
“Apart from the important role that China plays in global trade, its exports also contribute greatly to its GDP growth,” said Bai Rangrang, associate professor of the Department of Applied Economics at the School of Management under Fudan University.
“To some extent, it made up the gap in the drop of household consumption and business investment last year,” he said, noting that an important factor behind this is that China has opened up wider to the world.
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