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Prof. Lu Feng: Get the Right Mix of Investment and Consumption

Jan 04-2023   



As China phases out the pandemic controls and continues to apply proactive macro policies, its economic growth will likely bounce back to around 5% in 2023, said Prof. Lu Feng of the NSD in a media interview.

 

The figure would be significantly higher than the 3% that he estimated for 2022. Over the three pandemic-stricken years, China grew at a rate inferior to what its potential allowed. The result was palpably reflected in residents’ employment, incomes, and savings.

 

Economic growth is subject to the influence of a range of factors in 2023. Notably, as export declines, domestic demand will need to grow by at least 6% if the economy is to expand by 5%. Similarly, private enterprises still face some uncertainties; for them to pick up the steam, tough reforms will have to be undertaken. Efforts to correct some regulatory policies, in particular concerning the real estate industry and the platform economy, might go a long way in injecting vitality into the economy and boosting it to 6% annual growth, said Prof. Lu.

 

Compared with developed countries, China can still resort to investment to pull its economy due to the wealth of opportunities generated by its urbanization and industrialization drive. In 2023, capital will likely be poured into new infrastructure and real estate, he said.

 

Meanwhile, Prof. Lu believed that policies should be adjusted with the aim of stimulating consumption through income transfer to the residents. However, it remains to be seen how the ‘Scar Effect’ caused by the pandemic will affect consumer mentality.

Prof. Lu Feng: Get the Right Mix of Investment and Consumption

Jan 04-2023   



As China phases out the pandemic controls and continues to apply proactive macro policies, its economic growth will likely bounce back to around 5% in 2023, said Prof. Lu Feng of the NSD in a media interview.

 

The figure would be significantly higher than the 3% that he estimated for 2022. Over the three pandemic-stricken years, China grew at a rate inferior to what its potential allowed. The result was palpably reflected in residents’ employment, incomes, and savings.

 

Economic growth is subject to the influence of a range of factors in 2023. Notably, as export declines, domestic demand will need to grow by at least 6% if the economy is to expand by 5%. Similarly, private enterprises still face some uncertainties; for them to pick up the steam, tough reforms will have to be undertaken. Efforts to correct some regulatory policies, in particular concerning the real estate industry and the platform economy, might go a long way in injecting vitality into the economy and boosting it to 6% annual growth, said Prof. Lu.

 

Compared with developed countries, China can still resort to investment to pull its economy due to the wealth of opportunities generated by its urbanization and industrialization drive. In 2023, capital will likely be poured into new infrastructure and real estate, he said.

 

Meanwhile, Prof. Lu believed that policies should be adjusted with the aim of stimulating consumption through income transfer to the residents. However, it remains to be seen how the ‘Scar Effect’ caused by the pandemic will affect consumer mentality.