The economy is forecast to expand around 7.5 percent year-on-year in 2021 despite disruptions caused by the coronavirus pandemic, said Zhang Yuxian, director of the Department of Economic Forecasting at the State Information Center, a government think tank.
“We expect a gradual normalization of economic activity as well as policy normalization,” Zhang said. “The trend of a high growth rate may continue in the first half this year. For the second half of 2021, it will gradually return to normalcy.”
The economy made an impressive rebound from COVID-19 with 2.3 percent GDP growth in 2020, becoming the only major economy to achieve positive growth last year.
“China is playing a key role in driving world economic recovery,” Zhang said. “The world’s second-largest economy commanded around 17 percent of the world’s GDP last year, up from 16.3 percent in 2019. And the contribution of China to world economic growth remains around 30 percent annually.”
Looking at 2021, Zhang said China has the solid foundation and conditions to achieve sustained growth with the support of its huge domestic market, strong innovative capability, adequate funding, a complete industrial system, sufficient human resources and a developed logistics system.
China’s domestic consumer spending accounted for 54 percent of its GDP during coronavirus-stricken 2020, compared with an average 53.4 percent consumption rate from 2011 to 2019, data from the National Bureau of Statistics showed.
Zhang expected the government would maintain its support policies to ensure growth remained at a reasonable level in 2021, despite disruptions from the surging pandemic and mounting uncertainties at home and abroad.
The Central Economic Work Conference held in December said the government will keep macroeconomic policies consistent, stable and sustainable in 2021.
With the economy facing challenges amid rising uncertainties, Zhang believed policymakers will need to strike a balance between economic recovery and risk prevention.
“We need to be prepared to deal with uncertainties and consolidate hard-won gains,” Zhang said. “It is necessary to continue to pursue a proactive fiscal policy and a prudent monetary policy, avoiding sharp turns in policy.”
The government also needs to make a big push to ensure stability for steady economic momentum, he said. “The government needs to ramp up efforts to better ensure employment, people’s livelihoods, the development of market entities, food and energy security, stable operation of industrial and supply chains as well as smooth functioning at the community level, with a key focus on promoting long-term and high-quality economic growth.”
This year marks the start of China’s 14th Five-Year Plan (2021-25), in which policymakers are targeting sustained healthy social and economic development with an emphasis on a higher quality of growth.
With many parts of the economy now stabilized, the government should be dedicated to driving long-term reforms and innovation as well as accelerating the construction of a new economic development paradigm of “dual-circulation” that takes the domestic market as the mainstay while domestic and foreign markets complement each other, Zhang said.
Under the new development model, the country needs to make a big push to boost innovation-driven development, promote enterprise as the mainstay of the technological innovation system, move industries up to the medium-to-high end of the global industrial, supply and value chains, expand opening-up at higher levels, prevent risks, unlock the huge potential of domestic demand and continue the focus on supply-side reforms.
To fully unleash pent-up consumption potential, it is necessary to make continued efforts to tackle bottlenecks constraining domestic demand, including lack of efficient medium and high-end supply systems and a slowdown in residents’ income growth, Zhang said.
A series of demand-side policies to boost domestic consumption and investment are needed over 2021, such as optimizing the income distribution structure, expanding middle-income groups, removing certain administrative restrictions on consumption, boosting new types of consumption and speeding up new infrastructure construction.
According to the Central Economic Work Conference, China will pursue supply-side structural reform as the main task while emphasizing demand-side management in 2021 to create a dynamic balance between supply and demand based on higher standards.
With policy measures to unleash the country’s huge domestic demand, the economy is expected to rebound rapidly in 2021, with consumption being the major force driving economic recovery, according to a new report released by the Center for Forecasting Science of the Chinese Academy of Sciences.
The center said it expected that China’s GDP growth rate would increase 8.5 percent year-on-year in 2021, and that the nominal growth rate of consumption would hit around 10.7 to 11.7 percent.