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China confident on annual growth target despite headwinds

Update: 2022-03-16

Source: 中国政府网

BEIJING — China is confident that it has the necessary conditions to deliver this year's economic targets through hard work despite the protracted pandemic and mounting challenges, an official said on March 15.

In the latest government work report, China set its economic growth target for 2022 at around 5.5 percent, causing some to question whether such a goal is "increasingly unrealistic" as the country adheres to its dynamic zero-COVID policy.

However, according to analysts, the strict approach to tackling COVID-19 has proved effective not only in protecting public health, but also in an economic sense, as the gains from normalized production and consumption outweigh the costs of pandemic control efforts.

Policies coordinating COVID-19 control and economic development have paid off, with the Chinese economy registering sound recovery in the first two months of this year, marking a solid start for 2022, said Fu Linghui, a spokesperson with the National Bureau of Statistics (NBS).

The country's major economic indices improved in the January-February period, with the major production and demand indicators reporting sound year-on-year growth.

From January to February, China's value-added industrial output and retail sales of consumer goods increased 7.5 and 6.7 percent year-on-year, 3.2 and 5 percentage points higher, respectively, than in December last year.

Indicators in various fields showed positive signs as policies to ensure steady economic growth have taken effect, said Fu.

In the two-month period, China's fixed-asset investment went up 12.2 percent year-on-year, while investment in property development rose 3.7 percent.

The Spring Festival holiday and the Beijing 2022 Winter Olympics fueled the rebound of the service sector, including catering, rail and air transportation, and cultural and entertainment activities, according to the NBS.

Fu said that the momentum of economic growth is getting stronger, but cautioned that there are still looming uncertainties such as international commodity price hikes and volatile geostrategic relations that weigh on the international financial market.

Middle and downstream enterprises, especially smaller businesses, may bear the brunt, suffering from cash strains, he said.

In the face of such difficulties, the country has pledged a string of policies to better serve the real economy.

Tax refunds and reductions are among the key measures this year to maintain stable macroeconomic performance, said an executive meeting of the State Council on March 14, adding that a detailed plan for value-added tax credit refunds will be formulated and launched as soon as possible.

The meeting also noted that financial institutions should be guided to roll out measures targeting medium, small and micro enterprises, with a view to making financing more accessible and reducing comprehensive financing costs.

China's central bank pumped 200 billion yuan (about $31.37 billion) into the market via a medium-term lending facility on March 15, while injecting 10 billion yuan through seven-day reverse repos at an interest rate of 2.1 percent, as part of efforts to maintain reasonably ample liquidity.

Measures such as cuts in the reserve requirement ratio for financial institutions and interest rate can be taken to boost market confidence and expand demand, said Wen Bin, chief analyst at China Minsheng Bank, commenting that the economic recovery is better than expected.

Wen said that it will help with keeping the economy running within a reasonable range under the triple pressure of shrinking demand, supply shocks and weakening expectations.

China's economy remains on the recovery track, with great resilience and potential, said Fu, adding that the country has taken a leading position in economic growth amid the disruption of the pandemic over the past two years.

"The economic performance in the first two months will cement our confidence in fulfilling the 5.5-percent gross domestic product growth for 2022," he said.