Wei Jianguo: Interpretation of China’s V-shaped Economic Rebound
The National Bureau of Statistics announced on January 18 that China’s economic and social development in 2020 is better than expected. The GDP reached 101,5986 billion yuan, a year-on-year increase of 2.3% if calculated at comparable prices. For the very first time, China’s GDP exceeded 100 trillion yuan. What does it mean? What is the key to China’s V-shaped economic rebound? To answer these questions, a reporter from People’s Daily Online interviewed Wei Jianguo, vice chairman of China Center for International Economic Exchanges(CCIEE) and former vice minister of Commerce, and Zhang Yongjun, deputy chief economist of CCIEE.
Question: How do you interpret that China’s GDP exceeded 100 trillion yuan for the first time?
Wei Jianguo: It signifies the enhancement of China’s national strength, social productivity and people’s living standard, and demonstrates that China has made a big step forward in making itself a high-income country. Furthermore, the 100 trillion yuan GDP will attract more foreign businessmen from all over the world to invest in China and drive the world’s economic development. The data also injects more confidence in all of us and gathers new momentum for building a new development pattern and promoting high-quality development.
Zhang Yongjun: The unprecedented changes and the COVID-19 pandemic have brought us severe turbulence. Nonetheless, China’s economic performance has attracted worldwide attention. China has a complete industrial system and is the only country that has all the industrial categories defined by the United Nations Industrial Classification. It also has a huge market of 1.4 billion people and strong adaptability to cope with the impact of the pandemic. The new industries and models that emerged during the pandemic have promoted a steady recovery, transformation and upgrading of China’s economy.
Question: Why can China achieve a V-shaped economic recovery?
Wei Jianguo: China’s economic performance demonstrates the strong vitality and remarkable superiority of the socialist system with Chinese characteristics. China has great advantages in terms of speed, scale, quality and efficiency. For example, the government promulgated various policies last year and put forward requirements for effectively improving the implementation of relief policies to reduce the impact of the pandemic. We can see that the institutional advantages of the system can be used to reduce the impact of the pandemic effectively, which is the basis for winning the fight against poverty and building a well-off society in an all-around way.
In addition, China’s further opening-up has changed its trade structure. First, processing trade exports and general trade exports go hand in hand. Second, cross-border e-commerce has become one of the main trading methods during the pandemic. Third, the commodities exported by China have shifted from traditional products such as electrical appliances, household appliances, toys, high-tech products.
China’s economy has shown strong resilience during the pandemic. In 2021, China’s economy will continue to make progress and foreign trade is very promising.
With the signing of RCEP, China’s foreign trade is expected to experience double-digit growth in the next five to ten years. RCEP is the world’s largest trading economy, accounting for nearly one-third of global GDP, and the trade between China and ASEAN is highly complementary. ASEAN has become China’s largest trading partner, and the trade between them will continue to grow.
In addition, China will increase investment and trade with countries along the “Belt and Road”. Following the signing of RCEP, many countries along the “Belt and Road” will also sign bilateral free trade agreements with China one after another. Trade liberalization and investment facilitation between China and the countries along the “Belt and Road” will become a major trend. At the same time, the African Union and the Arab League will also strengthen cooperation with China to promote the development of regional trade.
Finally, digital technologies such as big data, cloud computing, 5G, and smart manufacturing will play a greater role in the Chinese economy.
Zhang Yongjun: There are three main reasons. First of all, we always adhere to the unified leadership of the party, act in the best interest of the people, give full play to the institutional advantages, mobilize resources from all aspects, and demonstrate China’s strength, spirit, and efficiency.
Second, China’s industrial system is relatively complete. Even under the impact of the pandemic, China’s economy can still operate smoothly. China is gradually becoming the core of the global supply chain. With industrial upgrading and the improvement in its business environment, China’s market and industrialization system will play an increasingly important role in the world.
Finally, Chinese companies have a strong ability to adapt to new changes. For example, BYD originally produced new energy vehicles, but managed to establish a production line producing anti-pandemic materials when the COVID-19 broke out. Many foreign companies are not able to do this.
Question: Looking at the whole year of 2020, consumption is still a negative growth. When will the turning point of consumption appear?
Wei Jianguo: The total retail sales of consumer goods were negative but it turned positive in the third and fourth quarter, especially in the fourth quarter, the growth of total retail sales reached 4.6%.
We will further unleash the consumption potential this year, so that the people can consume with confidence. To be able to do that, we need to ensure employment security, and protect the healthy development of enterprises. Increased consumption will not only push China’s economy forward but also allow people to enjoy a quality life.
Zhang Yongjun: From a macro perspective, the main factor affecting stable economic growth is consumption. How can we effectively prevent and control the pandemic without affecting the momentum of consumption recovery does require much attention and more targeted measures.
In general, I am still very optimistic about the domestic consumption prospects. China has 1.4 billion people and more than 400 million middle-income groups, and the world’s largest market. With the increase in per capita income and the upgrading of the consumption structure, there is still a lot of room for consumption growth.