Positive signs for China’s economy going forward
China’s economy should maintain steady growth in 2022, with new data showing strong manufacturing, investment and especially high-tech investment growth rates, according to a senior US economist.
Commenting on the National Bureau of Statistics’ January-February economic figures, Albert Keidel, a development economist specializing in East Asia at George Washington University, described China’s macro fundamentals as “very good” and that “the investment rate in GDP is still very high”.
The latest figures show the Chinese economy sustained a steady recovery in the first two months of 2022, with major production and demand indicators reporting sound year-on-year growth, official data showed in mid-March.
Keidel said China’s already strong investment levels across the board, combined with its continuous efforts to shore up demand, is “just a good strong formula” for growth.
And he added that the country’s policy focus on urban growth and integration of the rural workforce “is good for growth of the middle class and its contribution to consumption growth”.
Keidel, a former senior economist at the World Bank’s Beijing office, described the increased investment in high-tech manufacturing as “a real testament” to China’s ability to quickly respond to international uncertainties to reduce risks in related sectors.
He highlighted electric vehicles, industrial robots and solar cells will become increasingly promising sectors, especially as the country is committed to achieving high-quality and green development, he said.
“China’s plans for stronger overall demand through fiscal expansion, including at the local level, will combine with the already high investment rate in GDP, to generate strong healthy GDP growth,” said Keidel.
He said that while China faced multiple challenges, including the recent outbreak of Covid and geopolitical uncertainties such as the war in Ukraine, its “ability to turn on resources fiscally and financially to navigate economic headwinds” would stand it in good stead.
He commented: “China has been very clever in putting funds, particularly through its e-finance capabilities, which are so complex and really well-developed, to be able to put money into people’s accounts so that they can spend it”. The move was a “very creative solution, an alternative to a massive spending spree”, he said.
In addition, China’s recent policy proposals, ranging from fiscal stimulus to financial easing, will facilitate a sound recovery, the economist said. “That sort of multi-faceted approach means to me that if China can match its high rate of investment in GDP with expansion of demand, that growth is bound to be healthy,” said Keidel.
China’s two-year average GDP growth from 2019-2021 was 5.1%, laying a stable foundation for the country to achieve its growth target this year.