China’s macro-economy review 2021: A expert opinion
MOST recently, while addressing the keynote speech in the Davos World Economic Forum, Chinese President Xi Jinping “reiterated” the importance of “multilateralism” and “globalization” for the world economy.
Chinese President Xi stressed the need to have macro-“policy coordination” in the post-pandemic world for “mitigating” the spillover economic repercussions and achieving the desired goals of economic recovery.
Despite constant Western propaganda about Chinese economic so-called unsatisfactory performance during 2021 the most recently published data of the National Bureau of Statistics of China (NBS) its national economy expanded 8.1% during 2021 which was well above the government target of above 6% set at the start of 2021.
Moreover, China’s economy has reached $17.7 trillion which ranks second in the world, with the per capita GDP exceeding $12,000, which surpasses the world’s average.
It is a great achievement because of the “uneven” and “unequal” playing field for China because of constant US trade & economic sanctions, protective nationalism, weak regional as well as global economic conditions and last but not the least compounding impact of COVID-19 pandemic during 2020-2021. In addition to this, the US continued an unreasonable policy of suppression and decoupling from China in economy and trade and also somehow exerted pressure on the pace and productivity of the Chinese national economy. Moreover, China had to encounter many unexpected challenges in terms of severe flooding, commodity price hikes and thermal coal crunch. In this regard, keeping in view numerous socio-economic, geopolitical and geostrategic hardships President Xi succeeded to sail the economy from hot waters to banks of greater stability and sustainability and ultimately achieved 8.1% GDP during 2021 which is remarkable because China’s national economy has bucked the trend and achieved the twin goals of higher growth and lower inflation.
In this connection, if we analyze the national economy of China we conclude that over the past year, China’s nominal GDP has increased from 101 trillion Yuan ($15.9 trillion) to 114 trillion Yuan. The increase is equivalent to $2 trillion at the average annual exchange rate, which is equivalent to the annual economic aggregate of a relatively large major economy in the world.
If we comparatively evaluate achievements of the Chinese economy with other global economies during 2021, we can see that Germany’s economy increased by 2.7%, the US economy achieved 5.6%, the UK and Japan were lowered to 6.9% and 2.4%, respectively.
Thus China’s economic growth ranks among the top among the world’s major economies which vividly reflects strength, stability and sustainability of Chinese macro-economy. Furthermore, in the fourth quarter, the epidemic emerged in many regions, resulting in sluggish consumption and impact on the service industry, but the manufacturing industry performed well. The value-added of high-tech manufacturing and equipment manufacturing went up by 18.2% and 12.9%, respectively.
The report says that China’s total foreign trade in goods surpassed $6 trillion in 2021, with its scale reaching a new high and the quality steadily improving. In 2021, China’s actual use of foreign capital was 1.15 trillion Yuan, a year-on-year increase of 14.9%, and the scale of attracting foreign capital hit a record high. It reflected China’s pursuit of progress while maintaining stability to promote high-quality development, and also a powerful manifestation of China’s unswerving efforts to advance reform and opening-up.
According to another published report (January 2022) in 2021, China had 24 cities with GDP exceeding 1 trillion Yuan ($157.12 billion), with Dongguan in South China’s Guangdong Province joining the list, and Beijing becoming the first city whose GDP exceeded 4 trillion Yuan.
Dongguan has announced that the city’s GDP exceeded 1 trillion Yuan in 2021, making the city the 24th in China to reach that level. The city has a population of over ten million.
According to the said report, the total volume of the city’s imports and exports last year increased year-on-year by 15% to 1.5 trillion Yuan, despite China-US trade friction and the sporadic flare-ups of COVID-19.
Interestingly, some fifty years ago, Dongguan was still an agricultural county with few inhabitants. Since the implementation of constant economic reforms and liberalization, the city’s economy has now grown rapidly as it gradually became a global manufacturing base.
In 1978, Dongguan’s GDP reached 611.22 million Yuan. The city’s GDP totaled 7.377 billion Yuan in 1991, 12 times higher compared with the 1978 level. It is a microcosm of China’s rapid economic development since the reform and opening-up.
More cities in China have experienced rapid development in industrial output in recent decades, as China has changed from an agricultural country to a manufacturing power. In 2006, Shanghai was the first city whose GDP exceeded 1 trillion Yuan, and two years later Beijing reached the same level. The fact that 24 cities have now reached the 1 trillion mark shows the sustained momentum of the country’s economic development.
In 2021, Beijing became the first city in China with GDP totalling 4 trillion Yuan, a year-on-year increase of 8.5%. The new generation of information technology and the explosive development of the pharmaceutical manufacturing industry remained instrumental in Beijing’s economy.
Shanghai is also expected to join Beijing at the level of 4 trillion Yuan soon. It is the GDP level of more than 20 countries and regions in the world, such as Thailand, Belgium and Austria. China’s economy continued its gradual recovery after the epidemic, maintaining stable economic operations despite sporadic further outbreaks.
To conclude, the policy makers of China should immediately chalk out a holistic policy to streamline three aspects of demand contraction, supply shocks and weakening expectations to further strengthen present economic targets and consolidate future goals.
Moreover, policy makers should also give more incentives to medium-sized enterprises which are currently facing difficulties in production and operation, and market expectations and enterprises’ confidence fluctuate to some extent. In addition to this, the dawn of the RCEP and successful execution of BRI and CPEC have already accelerated the pace of Chinese macro-economy.
The need of the hour is that more concentrated efforts should be initiated for achieving goals of green, smart and inclusive economic development. There is an urgent need to further strengthen capacity building apparatus in health, service, and artificial intelligence technologies in the days to come.
Seemingly, two different forces are now colliding and competing in the spheres of conspiracies, contradictions and conflicts in which western propagated theory of China collapse theory has been constantly on the decline.
The core strength of the Chinese economy is self-reliance, innovation, resolution, indigenousness, national resilience, enormous potential and long-term sustainability which should be more confidently utilized in the future of China’s economic development.
— The writer is Director: Geopolitics/Economics Regional Expert: China, CPEC & BRI Member Board of Experts: The Center for South Asia and International Studies, Islamabad
