Significant expansion expected in milestone year
After a tumultuous year that most people would prefer to forget, what now for 2021?
As the new year begins, the pandemic still looms large, with the number of cases continuing to rise sharply in many Western countries.
China was the only major economy that witnessed growth last year, but with vaccines being rolled out, many remain hopeful of some kind of global recovery.
This year is an important one for China, as it marks the 100th anniversary of the founding of the Communist Party of China. The country is also set to meet the target of achieving xiaokang－becoming a moderately prosperous society.
It is also the first year of the 14th Five-Year Plan (2021-25), which will be published in March and is likely to set the course for China to join the high-income club of nations.
On the international scene, Joe Biden is set to become the 46th president of the United States later this month, with many observers optimistic about a resetting of Sino-US relations.
The environment will also be high on the agenda, with the United Nations Climate Change Conference, also known as COP26, due to be held in Glasgow, Scotland, in November.
Last month, key indications about China’s policy direction emerged during the Central Economic Work Conference, where there was commitment to support the nation’s economy as it continues its recovery from the pandemic. The conference also set a number of priorities, including boosting domestic demand, encouraging innovation and reinforcing supply chains.
George Magnus, research associate at Oxford University’s China Centre and a leading expert on the Chinese economy, said the conference was right to focus on demand-side reform.
He believes the Chinese economy could grow by 7 percent this year and move to a growth trajectory of 5 percent from 2022 onward.
“The rebound this year might be a bit bigger, but I have built into my forecast tightening of monetary and fiscal policy at some point,” he said.
Stephen Roach, senior fellow at Yale University’s Jackson Institute for Global Affairs, predicts a “significant rebound” of 8.5 percent in China’s growth this year after achieving 2.5 percent last year.
“This would average out at 5.5 percent over the two years, which is in line with what I believe is China’s underlying sustainable growth at this phase in its development cycle,” he said.
Koh King Kee, president of the Centre for New Inclusive Asia, a think tank based in the Malaysian capital Kuala Lumpur, said he thought China’s growth could reach 9 percent this year, a rate not seen for nearly a decade.
He said growth will be boosted by the Regional Comprehensive Economic Partnership free trade agreement between Asian nations, which was signed in November, and the new bilateral investment treaty negotiated between China and the European Union.
“With the economy fully recovered from the pandemic, I am optimistic about China’s growth,” Koh said.
The Five-Year Plan will detail China’s priorities up to the middle of the decade.
In its annual World Economic League Table published on Dec 26, the Centre for Economics and Business Research, a consultancy based in London, predicted that China would become a high-income country by 2023, well within the period of the plan exceeding a gross national income per capita of $12,536.
The report was bullish on China, predicting its economy would more than triple in size by 2035, the next major milestone year for the nation’s development.
Douglas McWilliams, deputy chairman and founder of the CEBR, believes the dual-circulation strategy, first outlined by President Xi Jinping in May, and which is likely to be central to the new plan, will be an important driver for China.
“The plan is to combine international trade with the strengthening of the domestic market. This seems an appropriate emphasis, given the relatively tense circumstances for international trade,” he said.