Chinese Economy: Uneven Recovery

Aug 01-2020   

Economic recovery might continue in the second half of the year, mainly to be pulled by infrastructure construction and real estate, but the growth trajectory would have some uncertainties, said Prof. Huang Yiping of the NSD in a recent webinar by the Chinese Development Forum. He’s also the Deputy Dean of the NSD.

In his speech, Prof. Huang analyzed the external environments, the overall trend of economic recovery, and the role of digital economy, among others.

The Chinese economy has grown to a such a size that any of its moves is destined to impact on the rest of the world. Consequently, it can’t continue to rely fully on the external markets and should shift the focus to the domestic market. The external markets will remain important, but cooperation with developing countries might turn out to be more important than that with developed ones. Prof. Huang spoke optimistically about China’s consumption demand in the long term, believing it will overtake the US and become the largest consumption market in the world.

He also pointed out that during the pandemic, the digital economy, comprising e-commerce and digital finance, has played a considerable role in stabilizing the macro-economy and will see its importance growing with time. Inclusive finance has been on a bumpy road worldwide, but loans based on digital technology and big data might offer a solution.

In the second half of the year, fiscal policies will gear up and two areas deserve extra attention: for one, new infrastructure construction, healthcare infrastructure construction and municipal infrastructure construction will see fiscal policies getting more active in driving investment; for the other, in light of the decreasing efficiency of capital, the government should encourage financial institutions to provide more support to the real economy.