Chinese Vice Premier Ding Xuexiang (丁薛祥) used a speech to global executives to reassure participants that China would continue to open up as international companies increasingly complain of market-access challenges.
“Opening to the outside world is a national policy, it is a mark of modern China,” Ding said at the annual China Development Forum in Beijing yesterday during a keynote speech.
He also read a message from Chinese President Xi Jinping (習近平), in which the Chinese leader pledged to continue to pursue a mutually beneficial opening-up.
China’s economy has rebounded since dropping “zero COVID-19” restrictions, with consumer spending, industrial output and investment all climbing in the first couple months of the year.
The recovery in domestic demand is especially important to Beijing, which is counting on consumer spending to help it reach an economic growth target of about 5 percent this year. The country needs to counter other risk factors, including falling exports, a still-weak property market and shrinking government resources for large fiscal stimulus.
Chinese Minister of Finance Liu Kun (劉昆) said at the forum that “while there are some blockages in the operation of the domestic economy, the fundamentals of economic resilience and potential are unchanged,” without elaborating on the specific issues.
Liu also said China would “appropriately” expand fiscal expenditure and further increase transfer payments from the central government to local administrations.
The government would introduce increased tax reduction measures to support market entities, and improve residents’ income through multiple channels, he added.
The American Chamber of Commerce (AmCham) in China said in a report earlier this month that for the first time in about 25 years, China is not a top three investment priority for a majority of US firms, with geopolitical tensions and domestic economic issues driving businesses to focus elsewhere.
“A year ago, 60 percent of companies said China was the top or a top 3 investment priority, and this year that’s fallen to 45 percent,” Michael Hart, president of AmCham in China, said earlier this month. “China is falling in the rankings as a place for people to invest globally. It’s still important, but not one of the top destinations for the majority of companies.”
However, the head of the IMF struck a positive note on China’s outlook, describing it as one of the “green shoots” in the world economy and urging authorities to rebalance the economy toward consumption.
IMF Managing Director Kristalina Georgieva said the “strong rebound” in the Chinese economy is important not only for itself, but for the world.
“The robust rebound means China is set to account for around one-third of global growth in 2023 — giving a welcome lift to the world economy,” Georgieva said in prepared remarks to the China Development Forum yesterday.
IMF’s January forecast for China puts GDP growth at 5.2 percent this year, an increase of more than 2 percentage points from last year’s rate, and driven by the anticipated rebound of private consumption as the economy reopened and activity normalized, she said.
Georgieva urged China to take measures to raise productivity and rebalance its economy away from investment and toward more consumption-driven growth that she said is more durable, less reliant on debt and would help address climate challenges.
To get there, China’s social protection system would need to play a central role through higher health and unemployment insurance benefits to cushion households against shocks, she said.
At the same time, market-oriented reforms to level the playing field between the private sector and state-owned enterprises, together with investments in education, would significantly lift the economy’s productive capacity, she added.
“The combined impact of these policies could be significant,” Georgieva said.
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