SMOOTH SAILING

Lan Xinzhen

How to realize high-quality growth while maintaining a moderate pace is key right now and heavily relies on economic restructuring

China has set its GDP growthtarget for this year at some 5.5 percent， according to the government work report delivered by Premier Li Keqiang at this year’s National People’s Congress session. Thesharp decline from last year’s8.1-percent growth rate does not stemfrom economic quandaries， but reflectsthe Central Government’s intention tokeep the country’s economic growthstable and sound.

The COVID-19 pandemic has dealta heavy blow to the global economy，China’s included， but the lattermanaged to rebound soon after theshort-term downturn was reversedby effective anti-COVID-19 measures， hitting an 8.1-percent growth rate in2021， much higher than the 6-percent goal stated in last year’s governmentwork report.

The 8.1-percent growth rate isobviously a bit too high， and hard tosustain， as too strong momentummay decrease the stamina thatsupports the overall recovery process. Moreover， a high growth target on top of an already high base might resultin economic bubbles. A relativelylow target， instead， better facilitatesstable economic growth. It is also areasonable goal given this year’s tasks of advancing employment， furtherimproving the people’s livelihood，bolstering risk prevention andcontrol， as well as progressing carbon neutrality efforts.

China finds itself at a critical stageof shifting to high-quality economicgrowth following many years of a high- speed growth focus. How to realizehigh-quality growth while maintaining a moderate pace is key right nowand heavily relies on economicrestructuring.

China’s GDP growth for 2019 was 6.1 percent， whereas for 2020 and 2021，the two years plagued by the COVID-19 outbreak， their combined average ratestood at 5.1 percent. Compared with the rest of the world， 5.5 percent is by nomeans a low target， but it’s the highest among major world economies.

China’s GDP for 2021 stood at114.4 trillion yuan （US$18 trillion），so a 5.5-percent growth on this basisequals 9 trillion yuan （US$1.4 trillion）， approaching a whole year’s economic aggregate for economies ranking 11thor 12th on the global economic growth list.

Yet some have voiced their concerns that a 5.5-percent target is one toohigh to hit， and several internationalfinancial institutions， including theWorld Bank， have put it between 4and 5 percent. Their reasons are thatin 2021， China’s economic growthwitnessed a slip with each quarter and this year the international situationis further complicated by the Russia-Ukraine conflict.Despite the deteriorating globalenvironment， China’s foreign trade isnot subject to worsening conditions， in that the country’s economic and tradeties with Southeast Asia， countriesalong the Belt and Road， the EuropeanUnion and the United States willremain intact and China’s status in the global supply chain will not change.Domestically， the dynamic zero-COVID-19 policy and high vaccinationrates will only help tame the pandemic more effectively， in turn strengthening economic recovery and growth.

In 2021， China’s economic growthwas primarily driven by consumption， imports and exports and investments， with consumption accounting for65.4 percent， imports and exports for20.9 percent and investments for 13.7percent. In this way， the 2022 growthrate might be a bit higher than thestipulated 5.5-percent target. The only uncertainty is how much investments will contribute to this year’s economic progress.

The Chinese Government hasdeliberately slowed down the pace ofeconomic growth， as pointed out inthe government work report， whichhas signaled that this year’s fiscaldeficit will remain around 2.8 percent， much lower than last year’s 3.2 percent. Meanwhile， government spendingand bank loans will lean more towardlivelihood projects. All these reflect the authorities’ proactive efforts to realizea moderate growth rate， bringing the 5.5 percent target well within reach.