Charts: China’s economy in 2021

A view of the Lujiazui financial area, Shanghai, China. /APC

A view of the Lujiazui financial area, Shanghai, China. /APC

The year 2021 was at the historic convergence of China’s “two centenary goals”. After decades of effort, China has achieved the first centenary goal of building a moderately prosperous society in all respects, President Xi Jinping announced at the grand rally to celebrate the 100th anniversary of the founding of the Communist Party of China on July, 1st.

Now, the country has embarked on a new journey, embarking on the second centenary goal of fully building a modern socialist country.

Despite the persistence of COVID-19, China has maintained a leading position in the world in economic development and epidemic control, with progress made this year in industrial chain resilience, reform and openness, and the livelihoods of the people.

Economists believed China would likely post its second year of positive growth in 2021, after being the only major economy in the world to record positive economic growth the previous year.

The World Bank predicts that the Chinese economy will grow by 8% this year.

Hang Seng Bank China forecast an 8.2 percent annual growth rate in China in early December, noting that upside factors such as strong exports and accelerating manufacturing investment were supportive.

“These positive factors will not only be maintained at the end of this year, but will continue into next year,” Wang Dan, the bank’s chief economist, said in a note.

Strong foreign demand has boosted China’s exports and industrial profits. “Chinese exports have grown at a double-digit rate since COVID-19 and are currently at historic highs, especially exports to US and European markets. The world will continue to depend on China for production as long as the outbreak continues. “Wang told CGTN.

However, the trajectory of the Chinese economy is not without obstacles. China’s economic growth rate has shifted from high to low in the first three quarters, reflecting mounting downward pressure facing the country’s economy.

The annual Central Economic Work Conference in December warned that China’s economic development is facing pressure from shrinking demand, supply shock and weakening expectations, and the environment exterior becomes more and more complicated, dark and uncertain.

“We must face the challenges head-on while remaining confident,” said a statement released after the meeting, citing China’s strong economic resilience and unchanged fundamentals underpinning long-term growth.

Next year’s economic work should prioritize stability while pursuing progress, the meeting concluded.

Common prosperity

To build a modern socialist China, eradicating extreme poverty was necessary, but it was not enough. Gaps between regions, urban and rural areas, and in people’s incomes, are also issues to be addressed for long-term prosperity.

And that’s when China began to strive for common prosperity, which refers to the wealth shared by all, both materially and culturally, to further improve people’s well-being. . China has increasingly focused on pursuing “common prosperity,” that is, wealth shared by all, through a systematic portfolio of policies, such as tax reforms and encouraging philanthropy.

Common prosperity is an essential requirement of socialism and a key element of modernization with Chinese characteristics, Xi said at the 10th meeting of the Central Finance and Economy Committee in late August.

For economists, much of China’s major economic tasks for 2022 will reflect the central national agenda for common prosperity.

Read more: How will China achieve common prosperity? – Enlarge the “cake” first

Risk reduction and model change

In Wang’s opinion. China has managed to contain financial risks in the housing market and local government debt this year.

“Central authorities have sent a clear signal about the long-term nature of these policies. The economic model is in transition from pursuing growth to high-quality development,” she said.

Despite the Chinese economy’s outperformance for many years, its system needs to be adjusted to address and correct several imbalances, said Jeremy Stevens, chief China economist at Standard Bank.

In 2020, China’s top leaders proposed a new development paradigm called “dual circulation” to anchor the future development of the country’s economy. In such a paradigm, the Chinese economy postulates to be dominated by domestic economic circulation and is facilitated by circulation between China and the rest of the world.

Read more: Why is the dual circulation development model important for the Chinese economy?

“Already in June 2020, Beijing had made it clear that it was returning to focus on medium-term political objectives, and this year it has started again to reduce the risks of the financial system, for example. This pivot towards a vision beyond beyond the cyclical path is critical to continued economic success,” he told CGTN.

“The end game is that consumption becomes a larger share of GDP…Common prosperity is a recognition that consumption must drive growth. To this end, it is not enough for Chinese households to simply consume with greater share of their income, but income needs to be greater, wealth needs to be shared more widely, and people need to be able to spend more of that income on discretionary items,” he added.

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