In 2020, our world went through a pandemic and global changes, both on a scale unseen in a century. It was truly an extraordinary year for both China and the world. China has become the only major economy in the world to achieve positive economic growth, and made decisive achievements in the three major battles, significant progress in scientific and technological innovation, important breakthroughs in reform and opening-up, and strong protection for people’s livelihood. In 2020, the remarkable achievements of China’s economy injected the hard-won warmth into the gloomy world economy.
Steady Recovery of China’s economy Conducive to Global Economic Recovery
In 2020, China’s GDP surpassed 100 trillion dollars for the first time with a year-on-year growth of 2.3%. GDP Per capita exceeded US $10,000 for two consecutive years; China’s economic share of the world economy has risen from 16.3% in 2019 to about 17%. In 2020, China’s total grain production hit a record high, remaining above 650 million tons for six consecutive years, ranking first in the world; the value added by the manufacturing sector is expected to rank first in the world for the 11th consecutive year; the total length of high-speed railways in operation reached 38,000 kilometers and the number of 5G terminal connections exceeded 200 million, all ranking first in the world. The steady recovery of China’s economy has undoubtedly made a tremendous contribution and positive impetus to the recovery of the world economy.
Transformation and Upgrading of China’s Consumption Cultivates Global markets
Against the negative impact of pandemic, China has taken a number of measures to boost consumption, including upgrading service consumption, cultivating new types of consumption, and actively expanding environment friendly consumption. From the fourth quarter of last year, the total retail sales of consumer goods has started to rebound rapidly, growing by 4.6% year-on-year. The third China International Import Expo held in early November was the largest online and offline exhibition in China with most of the participating countries under regular epidemic prevention and control. The exhibition area was nearly 360,000 square meters, 411 new products, technologies and services were debuted and premiered, nearly 400,000 professional visitors registered, and the intended deals exceeded $72.6 billion As China speeds up to build the new paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. The strong resilience of China’s consumer market not only stabilizes expectations for China’s economic recovery, but also provides huge development opportunities for more overseas brands.
Accelerating the Opening-up Process Triggers Global Investments
In 2020, China continued to deepen its reform and opening-up despite the impact of COVID-19. The actual use of foreign capital for the whole year is 999.98 billion yuan (US$144.37 billion), a year-on-year increase of 4.5% and hitting the record. New Foreign Investment Law was implemented on January 1 in 2020.The Overall Plan for the Construction of Hainan Free Trade Port was officially released in June. China’s negative list for foreign investment has been further shortened to just 33 items from 40 items in 2019. In 2020, China advanced high-quality Belt and Road cooperation, officially signed the Regional Comprehensive Economic Partnership Agreement (RCEP), and completed the negotiations of the China-EU Comprehensive Investment Agreement (CAI) as scheduled.
The increasingly open and developing China has become a hot spot for foreign investment! American companies such as American Express, Qualcomm, Johnson & Johnson and Exxon Mobil have all accelerated their investment in China. The latest report from Rhodium Consulting Group shows that M&A transactions by foreign companies in China have reached an unprecedented scale in 10 years during the past 18 months.
China’s Trade Recovery Benefits Global Cooperation
In 2020, China’s foreign trade imports and exports stabilized rapidly and continued to improve, demonstrating strong resilience and comprehensive competitiveness in the face of a sharp contraction in global trade. The total trade volume of goods reached a record high of 32.16 trillion yuan, up 1.9% year-on-year. Cross-border logistics of Chinese goods is becoming more and more stable. In 2020, 12,400 freight trains traveled between China and Europe, up 50%, reaching 97 cities in 21 European countries and ensuring sufficient supply for those markets. China’s trade volume with Belt and Road partners reached RMB 9.37 Trillion. China’s trade potential has effectively led to the quick recovery of the international supply chain, and injected stronger momentum into the global economic recovery.
Ensuring Supply, Controlling Prices, Stabilizing Employment and Improving People’s Lives
The people’s wish is what governments strives for. In the face of severe shocks, China worked all out to secure the supply?control the price and stabilize the employment. 11.86 million new urban jobs were created, and consumer price index (CPI) rose by 2.5% throughout the year. The disposable income per capita was RMB 32,189, an actual increase of 2.1%, basically at the same pace with economic growth. People’s wallets are getting bigger and bigger!
The pandemic has comprehensively raised people’s awareness of life and health. The “Internet + Medical consultation” model continues to upgrade in response to demands. The big data and cloud computing in health management effectively ensured household safety, food & drinks, rehabilitation and other health & elderly care services evolve in the direction of smartness and diversification. From January to November, the income of social work and family service enterprises among service enterprises increased by 6.3% and 5.7% year-on-year respectively, which was 4.7% and 4.1% higher than general growth rate of all service enterprises above designated size.
Furthermore, 5.51 million rural people who were under poverty line have all been lifted out of poverty. China has completely eradicated absolute poverty and region-wide poverty. On the way to a moderately prosperous life, no one was left behind!
Implementing Policies Scientifically, China Offers wisdom and Approaches to Recover World Economy
The “V-shaped” rebound of Chinese economy is not a coincidence, let alone luck. It embodies the hard work of all Chinese people, and is inseparable from Chinese government’s multi-pronged, and effective economic governance.
Tip one is to formulate economic policies directly targeting market players. The government renders preferential tax and fee reductions to small and medium enterprises and self-employed individuals who were most affected by the pandemic, guides financial institutions to keep their profits at reasonable level and provide “peer-to-peer” services to large enterprises. The annual amount of tax and fee cuts exceeded 2.5 trillion yuan, and the distribution of inclusive enterprises loan increased by 30% year-on-year.
Tip two is to continue deepening reforms to stimulate the vitality of market players. The reform of state-owned enterprises and fiscal, taxation and finance system was accelerated, the reform on streamlining administration and delegating powers was deepened, repeated and unnecessary approvals were reduced, the facilitation of government services was promoted. All the above measures greatly improved the business environment and empowered the development of global economy.
Tip three is to trade off the policies to achieve most at a reasonable cost. China always emphasizes the proactive fiscal policy and prudent monetary policy, and ensure the timeliness, degree and effectiveness of macro policies. The government strives to better coordinate pandemic prevention and control with economic and social development.
There is no doubt that the economic policies adopted by China are pragmatic, precise and people-oriented, which can not only relieve the current difficulties, but also contribute to the long-term healthy development of China and the world economy.
At present, the negative impact of the pandemic on the world economy is still growing, unilateralism and protectionism are on the rise, and the global industrial and supply chains have been hit, but the general trend of economic globalization is irreversible, and openness and cooperation are still the trend of the times.
A single flower does not make a spring. China will remain, as always, a builder of world peace, a contributor to global development and a defender of international order. As long as the international community works together to safeguard multilateralism and free trade, improve the international economic governance system and build an open world economy, the world economy will surely be reinvigorated. Only when the world does well can China do well, and when China does well, the world will be better.
(The writer is China’s consul general based in Karachi)
Copyright Business Recorder, 2021