The foundation of China’s economic recovery is ‘not yet strong,’ leaders say

BEIJING – Chinese leaders warned at a major economic planning meeting last week that many challenges remain about growth.

While the rest of the world is still struggling with the panic of the pandemic coronavirus, China is expected to be the only major economy to expand this year.

President Xi Jinping, Premier Li Keqiang and other leaders who attended the Central Economic Work Conference from Dec. 16 to 18 were lively about China’s allied successes, still cautious about major changes to incentive policies, which according to state media. The annual meeting sets out development priorities for the coming year.

The meeting noted that while recognizing achievements, the country needs to be clearly aware of the changes caused by the pandemic and uncertainty abroad, state media reported.

“The foundations of our economic recovery are not yet strong,” the report said, according to CNBC’s translation of the Chinese text.

Covid-19 first appeared in the Chinese city of Wuhan at the end of last year. In an effort to control the uprising, Chinese authorities shut down just over half of the country early this year. GDP contracted by 6.8% in the first quarter, before returning to second-quarter growth at 3.2%.

“Not yet providing a strong foundation (foundation) to launch domestic demand and consumption a little slower than expected,” Bruce Pang, head of macro and strategy research at China Renaissance, said in a statement Chinese, according to CNBC translation.

Investment in manufacturing and the non-state sector has not bounced back strongly, Pang said. He said there are doubts about the stability of exports, uncertainty about earnings and many other concerns.

Economists have revealed that much of China’s recovery has come from traditional growth drivers such as exports, which have been fueled by demand from overseas for pandemic-related products.

But many Chinese still have increased spending amid concerns about future incomes. That lack of spending is a cause for concern for an economy that Beijing is trying to support more domestic demand, rather than foreign demand.

While China is set to grow at around 2% this year, sales by the end of November are down 4.8% from a year ago.

“Next year, the pace of economic growth may slow after a rapid pace at first,” state media reported, according to CNBC’s translation of the Chinese text. “Keeping the economy operating in a reasonable range remains a key test.”

GDP expansion in the first months of next year would look high compared to the first quarter decline in 2020. Overall, many economists estimate that China’s GDP will grow by about 8% next year. -year.

Pang indicated that rate would equate to 5% growth in 2020 and a further 5% increase in 2021.

That’s slower than the 6.1% pace in 2019.