Upswing Economy
Upswing Economy
China's economic outlook is poised to improve in the following months.
By Ouyang Shijia
China's economic outlook is poised to improve in the following months, buoyed by robust fiscal spending, and the country's growth target of around 5 percent for 2024 is achievable, according to a renowned economist.
Huang Yiping, dean of Peking University's National School of Development, told China Daily in an exclusive interview that the nation's economy is relatively stable, with better-than-expected indicators in the first two months.
"There is hope that the economy may continue to improve, given that the government will expand its fiscal spending and provide more support to economic growth in the coming months," Huang said. "The US economy looks like it is experiencing a soft landing, which should be positive for our external economic environment and exports."
China's economy has shown notable signs of recovery since the beginning of this year, with factory output and investment growth accelerating, as well as easing deflationary pressure, despite persisting challenges from both structural issues as well as insufficient demand.
"Overall consumption is relatively stable, but it's not particularly strong," Huang said. "For instance, if you look at the mobile payment numbers during the Chinese New Year, the overall number is rising, but the price per order is still very soft or very weak. And people are still worrying about the consumption downgrade."
He said the relatively weaker consumption indicates that the scarring effect of the COVID-19 pandemic, to some extent, has yet to fade. Huang called for more efforts to boost economic recovery and stabilize employment, which will bolster consumer sentiment and increase incomes for households.
He added that the government is allocating more resources to support social welfare, pension and healthcare systems, trying to revitalize rural areas, as well as supporting households in replacing their consumer durables with new ones. "These subsidies, spending, and so on would be positive for consumption."
According to the annual Government Work Report, China has set its GDP growth target at around 5 percent for 2024, similar to last year's goal. While this year's target may be more difficult than last year's because of the higher base in 2023, it is achievable given the upward trend in economic recovery, more fiscal stimulus and monetary easing, Huang said.
"In fact, the expectation is the US Federal Reserve may cut the policy rate by 75 basis points this year. This should also create more room for the People's Bank of China to ease monetary policy if it wants," he said.
On speculation that China's economy had already peaked due to multiple pressures, Huang said "all economies' growth rates will head toward a decline as they reach higher levels of development", and it is reasonable to see China's growth slow down after double-digit growth in the past decades.
"Some foreign experts are talking about the collapse of the Chinese economy. That's, I think, a wrong assumption or prediction to make. That's not something I would look at as a baseline going forward," he said.
Looking ahead, Huang highlighted the significance of delivering fast total factor productivity, or TFP, which is a measure of productive efficiency, measuring how much output can be produced from a certain amount of aggregate inputs.
"Growth really means innovation will have to become more important… The only way to sustain the current economic growth rate is that the efficiency and productivity will need to go higher," Huang added.