China looks to promote development of inclusive finance
The Chinese government has published a set of guidelines outlining measures to promote the expansion and development of inclusive finance over the next five years.
The document, issued by the State Council, said it expects progress to be made on the accessibility of basic financial services, the ease of obtaining finance, support for rural revitalization, education and protection of consumers and financial risk control.
“Efforts shall be made to improve key inclusive financial products and services, boost financial service quality concerning people’s livelihood, as well as support the sustainable development of small and micro business entities, rural revitalization, and green and low-carbon development,” it said.
It also called for the strengthening of financial literacy of the public and improving consumer rights protection.
In the short term, China is expected to achieve Beijing’s economic target for 2023, with a leading think tank predicting a 5.1% increase in gross domestic product (GDP) in the fourth quarter.
The Institute of Economics at the Chinese Academy of Social Sciences (CASS) also predicts that the country’s economy grew by 4.6% in the third quarter from a year earlier, down from 6.3% growth in the second three months of the year.
Its research found that economic growth was driven mainly by the burgeoning service sector, which it expects to be the driver of future growth.
“The Chinese economy is currently experiencing a period of favourable tailwinds for the service sector recovery, coupled with the headwinds of declining global demand for manufacturing products,” the CASS report said.
However, it added that the “economic rebound in the second half of the year is still expected to ensure annual growth of 5.1%”, meeting Beijing’s growth target for 2023 of around 5%.
However, the report warned that sluggish demand from overseas may hamper economic growth, unless the global economic situation improves. “It’s increasingly necessary to proactively implement policies in advance in order to ensure the stable and healthy development of China’s economy next year,” CASS said.
“If countercyclical policies can be timely implemented and take effect at the end of this year to the beginning of next year, it will be conducive to achieving the goals of sustained growth, stable employment and stable expectations over a relatively extended period.”
More international investment banks have begun to revise up their estimates for China’s economic growth in light of signs of improvement in economic indicators in August.
JP Morgan and ANZ raised their 2023 forecasts in September to 5% and 5.1% respectively, while Hang Seng Bank also said that its 2023 projection remained at 5.3%.
However, weaknesses in the property sector could hamper the expansion of the economy, despite stable industrial production growth and a rebound in retail sales, said Zhang Ning, senior China economist at UBS Investment Research.
Meanwhile, the World Bank is sticking to its 2023 economic growth forecast of 5.1%, although it downgraded its forecast for next year by 0.4 percentage points to 4.4%.
However, a former senior vice-president of World Bank is predicting that the Chinese economy, with its enormous domestic market and increasing innovation capability, “is well poised to rebound and experience dynamic growth and make a great contribution to global economic development”.
Justin Yifu Lin, now Dean of the Institute of New Structural Economics at Peking University, said: “When income does not grow and debt is very high, debt payments will become a burden forcing households and enterprises to reduce investment and consumption in order to repay loans, leading to sluggish economic growth.
“China’s debt level is not that high compared with many others in the world, and more importantly, Chinese people’s income is still on the rise thanks to emerging industries and industrial upgrades,” he told the China Daily website.
