Raised from the depths of economic despair caused by the pandemic, China has shown significant strength over the past week, astonishing both local and international spectators. The nation’s recovery from the grapples of a slow economy signifies hope and resilience for its fellow countries still entrapped in the pandemic’s claws. However, the significant question raised here is: Can this strength and economic recovery in China be sustained?
To analyze this, one has to look at the various economic indicators reflecting the current economic scene in China. Post the pandemic, China’s overall economic activity expanded at a rate of 4.9% year-on-yr in the third quarter. Although it seemingly misses economists’ expectations, these figures underscore China’s pace of recovery and its contrast against the rest of the world, which is still actively grappling with the current pandemic situation.
In addition to this, China’s factory output increased by 6.9% in September from a year earlier, the quickest pace since December 2019. This is just one of the many economic indicators that show China’s resilient performance as the country leapfrogged from the thralls of the pandemic to a consistent growth trajectory.
Supporting China’s economic recovery is solid consumer spending. Retail sales, a significant indicator of consumption strength, grew by 3.3% in September over the year – a justifiable leap from a 0.5% rise in August and the fastest growth this year. However, the nation has not been complacent with its recovery; it is taking strategic steps to sustain the positive surge witnessed over the last week.
To reduce reliance on other nations and bolster its internal growth, China is accelerating its dual circulation strategy. As per this strategy, China is focusing on elevating domestic consumption and investment while simultaneously encouraging local technological advancements. It is a grand plan to create a self-contained cycle of supply and demand, with limited reliance on external markets.
In the international sphere, China, not being isolated, is also encouraging foreign investment. Recent amendments to the country’s law on foreign firms will provide overseas investors more freedom, protection, and opportunities in China’s economy. This prospect of the bustling domestic market coupled with positive government policies makes China an attractive destination for foreign investment, ensuring an additional support pillar for sustainable economic growth.
Significantly, China has taken serious cognizance of the digitization wave sweeping across the globe. The country has adopted digitization as a part of its growth trajectory. From Alibaba, the e-commerce giant to Tencent, the gaming and social media behemoth, China’s digital corporations are gaining in strength and revenue generation, contributing immensely to the national economy.
It’s worth noting that measures taken by the People’s Bank of China (PBOC) have also shown promise in helping stabilize China’s economy. Its prudent strategies, like targeted reserve requirement ratio (RRR) cuts, have provided liquidity for firms, ensuring their survival during tough times. The proactive approach to liquidity management by PBOC exemplifies
