China will implement a series of measures to tackle and defuse major risks and promote an overall improvement in economic operations in 2023, putting stabilizing growth, employment and prices in a prominent position in economic policymaking next year, according to the Central Economic Work Conference, which concluded on Friday.
The closely watched meeting, which often sets the tone for economic policymaking for the coming year, was held in Beijing from Thursday to Friday, according to the Xinhua News Agency. President Xi Jinping delivered an important speech at the conference, reviewing the country’s economic work in the past year, analyzing the current economic situation and outlining economic work for next year, according to Xinhua.
The meeting noted that China’s economy maintained overall stability in 2022, a hard-won result of various measures taken to stabilize growth, but still faces “relatively big” pressure from shrinking demand, supply shocks and weakened expectations, calling for firm confidence in economic work and vowing major efforts to ensure high-quality, reasonable growth.
Coming at a time when the world’s second-largest economy faces various downward pressure, including the domestic epidemic situation and global recession risks, the meeting offered a slew of measures to tackle risks and boost growth, injecting confidence and improving expectations for economic recovery next year, economists noted.
The meeting pointed out that while facing “three-fold” pressure and deepened impact of turbulence in the external environment, China’s economy maintains strong resilience, huge potential and sufficient vitality, according to Xinhua.
For economic work in 2023, China will adhere to the general tone of seeking progress while maintaining stability, better coordinate epidemic prevention and control and economic and social development, better coordinate development and security, focus on stabilizing growth, employment and prices, effectively prevent and defuse major risks and promote overall improvement in economic operation, the meeting decided.
“For an economy as large as ours, keeping the economy running smoothly is of paramount importance,” the meeting stressed.
As many in China and around the world closely watch China’s economic work in 2023 amid increasing downward pressure, especially after China optimized its anti-COVID-19 prevention and control measures and eased anti-epidemic restrictions last week, the meeting offered a much-needed sense of certainty and direction to boost confidence in economic recovery next year, analysts noted.
While the general tone remains largely the same, “the intensity of monetary and fiscal policies will certainly increase, including stimulus policies. I think this is actually boosting and stabilizing confidence,” Hu Qimu, deputy secretary general of digital-real economies integration forum 50, told the Global Times on Friday.
Among the other major takeaways, the meeting stressed the need to step up proactive fiscal policy to maintain the necessary fiscal spending intensity as well as prudent monetary policy to keep reasonable and ample liquidity. As a crucial part of efforts to stabilize growth, the meeting said that priority should be given to restoring and expanding consumption, vowing support for consumption of housing, new-energy vehicles and elderly care.
The focus on boosting consumption is timely, as consumption has been particularly impacted by the COVID-19 epidemic, analysts noted. In November, China’s retail sales fell 5.9 percent year-on-year, the first contraction in five months, according to official data released on Thursday. The retail sales decline and growing COVID-19 infections in many places across the country also fueled concerns over economic growth, including pessimistic views reported and promoted by foreign media.
However, analysts said that when the epidemic situation improves, consumption as well as overall economic growth will also improve significantly next year, especially under various pro-growth policy measures. China has released a sweeping guideline on expanding domestic consumption, which plays a major role in China’s pursuit of high-quality development and Chinese modernization, through 2035.
“Overall improvement is the trend in that both the economic growth pace and incremental growth will be significantly higher than that of this year,” Tian Yun, a Beijing-based economist and former vice director of the Beijing Economic Operation Association, told the Global Times on Friday, noting that the meeting is focused not only on strong recovery in the short term, but also on a stable transition for the next few years. “On the one hand, the meeting emphasized stability, but on the other hand, it also stressed high-quality,” Tian said.
The Central Economic Work Conference also repeatedly stressed the need to boost internal demand. For example, on housing, which is under intense pressure, the meeting vowed support for organic demand and upgrading needs. The meeting also vowed support for the private sector and digital economy platforms.
Tackling major risks
The conference also called for preventing and defusing major risks in various areas including housing, financial markets and local government debts. China must focus on developing the real economy and hold the bottom line of preventing systemic risks, the meeting stressed.
While domestic risks are largely under control, China’s economic development also faces a worsening external environment marked by rising unilateralism and protectionism as well as growing economic sanctions and trade blockades imposed by the US, analysts noted.
“Downward pressure for China’s economy is mainly due to the US’ unilateral policies, the pandemic and the Ukraine crisis,” Cao Heping, an economist at Peking University, told the Global Times on Friday, adding that the country’s policies that were effective in the past can still play a significant role. “This should be the reason why the tone is more consistent this time.”
Amid the US’ reckless push for economic “decoupling” and a technological blockade, China’s focus will continue to be bolstering its own innovation capabilities, while also expanding international cooperation through continued opening-up and other efforts.
The Central Economic Work Conference also stressed the need to make breakthroughs in weak links of core technologies and components. It called for accelerating the research and development and application of cutting-edge technologies such as new energy, artificial intelligence, bio-manufacturing, green and low-carbon, and quantum computing.
Increasing investment in high-tech sectors will continue to be a main focus of the government, which is not only conducive to stabilizing investment and overall economic growth but also to ensuring long-term, high-quality growth, analysts noted.
“Even when the economy is under very large downward pressure, the innovation driving force of the Chinese economy is still very well preserved, and we are still constantly cultivating high-end manufacturing and emerging industries,” Hu said. “These are precisely the engines of high-quality economic growth.”
The meeting also vowed to further stabilize exports and foreign investment. It called for further expanding market access, actively pushing for accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Digital Economy Partnership Agreement and other high-level international agreements. It also vowed to provide maximum convenience for foreign businessmen to come to China to engage in trade and investment activities.
Despite downward pressure on the Chinese economy, foreign investment in China continued to increase over the past year, highlighting foreign investors’ persistent confidence in the Chinese economy. In the first 10 months of 2022, foreign direct investment in the Chinese mainland, in actual use, expanded 14.4 percent year on year to nearly 1.09 trillion yuan, according to official data.
As the global economy faces recession risks, China will continue to be a top destination for foreign investment in 2023, analysts noted.