DESPITE the western constant decoupling and de-risking policies the Chinese economy remained strong, stable and sustainable during 2023. Moreover, it will be further developed, diversified and determined in 2024 and beyond because of its huge base and productivity channels. The Chinese wisdom of economic diplomacy, trans-regional connectivity, numerous FTAs, integrated regionalism, qualitative industrialization, digitalization, green transformation and above all the BRI are successfully countering western false and fake propaganda of China’s Economic Collapse Theory. The Governor of People’s Bank of China (PBC) statement vividly reflects the Chinese national economy diversity which has continued to recover with a pronounced overall upturn, and the nation is expected to achieve its full-year GDP growth target of about 5% in 2023
It seems that China is blessed with a strong innovative capacity, a huge consumer market, a well-developed infrastructure, a complete industry chain and abundant and high-quality human resources, which, along with policies of openness, modernization, qualitative industrialization, international cooperation, economic globalization and timely institutionalization of new structural reforms pertaining to private sector growth, rectification of real estate market, domestic banking, stock exchange, foreign direct investment and above all further nurturing of human capital negate the western propaganda of so-called slowdown or soft landing of its economy during 2023. Thus the economy will maintain healthy and sustainable growth in 2024.
The Chinese Central Bank’s Governor Gongsheng Pan while addressing a high-level conference co-hosted by the Hong Kong Monetary Authority and the Bank for International Settlements in Hong Kong stated that upward revision of the IMF forecast for China’s GDP growth this year to 5.4%, a rate that remains a leader among the world’s major economies is a positive sign. Moreover, China’s GDP has exceeded 120 trillion Yuan ($18 trillion) clearly demonstrates its unmatched stability and sustainability.
In addition, China is undergoing a transformation of its economic growth model. The traditional model, which relied excessively on infrastructure and real estate investment, may achieve higher growth in the short term, but it also solidifies structural contradictions and undermines the sustainability of growth. Moreover, high-quality and sustainable development is more important and China should pay more attention to economic restructuring and cultivating new growth sectors. Lowering the reserve requirement ratio and the policy rate, which drove down market interest rates such as the loan prime rates proved effective during 2023. Hopefully, the PBC will maintain a prudent monetary policy to support the development of the real economy.
It is predicted that China’s economy will continue to grow steadily in the fourth quarter, and the nation will have no problem in achieving economic growth of about 5% this year, which will even exceed the government’s expectations. The contribution of consumption to GDP will remain above 60% in 2023, boosted by support policies throughout the year as well as the year-end consumption season. Several provinces such as Southwest China’s Sichuan, South China’s Guangdong and East China’s Jiangxi provinces have been actively issuing consumption vouchers, or plan to do so, which basically focus on cultural and tourism spending, as well as automobile and home appliance consumption.
The adoption of a set of 25 measures to boost financial support for private firms, including efforts to diversify financial channels for private businesses has further streamlined the private sector. National Development and Reform Commission (NDRC) says that the Chinese economy remains on the path of an upswing recovery, after overcoming difficulties as well as challenges during the past months, and it has a bright prospect for further development. Evidently, China remains as the single largest engine of global growth and will contribute about one-third to the world’s economic growth this year. It is confident and capable of achieving long-term stable development, continuously bringing new impetus and opportunities to the world through China’s accelerated development. The latest US ratings agency Moody’s has cut its China’s credit outlook from stable to negative.
However, it seems that China’s enormous market demand, a complete industrial system with globally complete industrial system, advanced infrastructure, and enhanced supply chain will continue to contribute to economic resilience and digital transformation. Moody’s Investors Service said it had reaffirmed China’s A1 long-term local and foreign-currency issuer ratings, but it also cut its outlook for China’s government credit ratings to negative from stable, noting that China’s fiscal support for local governments and the slumping property sector poses risks to its fiscal, economic and institutional strength which is totally incorrect and untrue.
Nevertheless, China’s economy remains resilient and it is capable of deepening reforms to tackle all the challenges. Market expectations and the confidence of the private enterprises have kept increasing in recent months. In the first three quarters this year, the number of newly established private enterprises grew by 15.3% compared with the same period last year. China has confidence and capability to achieve long-term stable development and continuously bring new impetus and opportunities to the world.
In summary, the Chinese economy has strong resilience; huge potential, economic tools and sound fundamentals of the country’s economy remain unchanged and will not change. China is the single largest engine of global growth and will contribute about one-third to the world’s economic growth this year. It seems that Moody’s overestimated the difficulties the economy faces while underestimated China’s resolve and capability of boosting reforms and dealing with risks. The US credit rating agency’s move is part of US-led western campaign bad-mouthing and smearing China’s economy which will prove to be futile.
Frankly speaking, Moody’s rating system has limitations, as it lacks dynamic research and in-depth understanding of China’s economic development and governance model. It is crystal clear that the world’s three largest credit rating agencies including Moody’s, S&P Global Ratings and Fitch Group tend to be stricter on emerging-market countries, as they tend to get lower ratings even if their debt pressure is lower than that of developed economies. The Chinese hyped so-called local government debt risk is lower compared with developed economies, and the central government has already taken all necessary active steps to solve local government debt risks with the issuance of additional one trillion Yuan ($141 billion) special purpose treasury bonds. Resultantly, China’s financial market remains largely stable, reflecting that investors are not impacted by Moody’s latest credit outlook cut and have maintained relatively strong confidence and sound expectations.
—The writer is Executive Director, Centre for South Asia & International Studies, Islamabad, regional expert China, BRI & CPEC & senior analyst, world affairs, Pakistan Observer.
Email: [email protected]
views expressed are writer’s own.
