Adjustment of China’s COVID Measures a Boon to Economic Recovery

From Xinhua News Agency, Dec. 17, 2022. Complete text:

Beijing – Whether those long-standing doomsayers like it or not, a new set of measures to optimize China’s epidemic response will continue to facilitate the recovery of the world’s second-largest economy.

It’s not a hasty assumption, but a rational assessment in view of the tremendous resilience, enormous potential and long-term sustainability of the Chinese economy.

With the flow of people and exchange of goods to be further facilitated, the new policies are set to gradually revive business activities across a wide range of sectors, including consumer spending, investment and foreign trade – thus the huge market potential will be unleashed to allow economic output to expand.

As the International Monetary Fund (IMF)’s managing director Kristalina Georgieva has put it – the decisive steps by Chinese authorities in recalibrating their COVID policies can create a better impetus for reviving growth in China, particularly if combined with more broad-based vaccinations, provision of anti-viral treatment, and ramping up healthcare capacity. This can be very good for the Chinese people and economy, and also good for Asia and the world economy.

Signs of recovery have begun to emerge. For instance, all top 100 companies in the Beijing Economic-Technological Development Area have resumed production, while about 99.5% of major projects in southwest China’s Chongqing Municipality have restored construction.

Some localities in China are moving fast to boost foreign trade and investment. The city of Suzhou in east China’s Jiangsu Province has chartered a plane to send a business delegation to France and Germany. A series of investment promotion fairs are scheduled. Similar business matchmaking and promoting events have also been initiated in east China’s Anhui Province.

Morgan Stanley raised its forecast for China’s gross domestic product (GDP) in 2023 to 5.4% from its previous outlook of 5%, predicting that a rebound in activity will come earlier and be sharper than expected.

Despite headwinds, the sound fundamentals of the Chinese economy remain unshakable. China secured another bumper grain harvest in 2022, marking the eighth consecutive year that the country has reaped a grain harvest of over 650 billion kilograms. This has provided strong support for stabilizing the economy and laid a solid foundation for the country to tackle various risks and challenges.

In the first 11 months of 2022, the Chinese economy saw a steady expansion in fixed-asset investment, industrial output and online retail sales, despite challenges posed by domestic COVID-19 outbreaks and a complicated global environment.

China’s good track record offers reason for optimism. For the past three years, China has maintained the overall stability of its economy, ensured grain supply, kept industrial and supply chains basically stable, and effectively protected people’s lives and health.

China became the first major economy to achieve positive growth in 2020. In 2021, its economy expanded 8.1% year on year, bringing the average growth rate from 2020 to 2021 to 5.1%. Facing the impact of the epidemic and other factors beyond expectation this year, China promptly introduced a policy package for stabilizing the economy. The downward trend at the beginning of the second quarter was quickly reversed, and the economy is recovering and showing stabilizing momentum.

Although it was inevitable that GDP growth would fluctuate this year in the face of many unexpected factors including the epidemic, it is necessary to handle this issue rationally and to seek truth from facts. Efforts should be continued in order to achieve an overall improvement in economic performance, characterized by higher quality and reasonable growth.

The Central Economic Work Conference that concluded on Friday [Dec. 16] in Beijing demanded making economic stability a top priority and pursuing steady progress while ensuring economic stability for the next year.

The meeting noted, for an economy of China’s size, it is vital to maintain a stable economic performance. Efforts will be made to stabilize growth, employment, and prices so that major economic indicators will stay within an appropriate range. The potential of the domestic market will also be fully tapped so that domestic demand can play a stronger role in driving economic growth.

China has policy reserves to bolster its economy and counter downward pressure. China is moving towards a more optimized epidemic response, and this means the market and market confidence will receive a boost.