China’s structural overhaul ushers in an era of solid economic growth

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Illustration: Chen Xia / Global Times

The US economy slowed sharply in the third quarter, growing at an annualized rate of 2%, lower than China’s 4.9% growth for the corresponding period. For the year as a whole, the gap between the world’s two largest economies is expected to narrow further, as China’s annual growth rate is likely to reach 8%, doubling the speed of U.S. GDP growth.

As always, policymakers in Beijing will continue to focus on developing the “twin engines” of consumption and investment to stimulate domestic demand, in addition to vigorously expanding its exports. Barring unforeseen incidents or natural disasters, China is well positioned to achieve annual growth of around 5% in the coming years.

And, as a rising economic power, China will continue to provide abundant and lucrative opportunities for other economies around the world that are ready to actively engage with “the Middle Empire.”

When asked why she insisted on moving towards a closer economic and political relationship with China, outgoing German Chancellor Angela Merkel told German media last week that when she was elected to the head of Germany in 2005, China’s GDP was only $ 2.8 trillion, less than that of Germany. then $ 3.2 trillion. Nonetheless, Merkel had the rare foresight of knowing that China will develop very quickly, like a galloping horse.

Now, as Merkel steps down and prepares to retire, China’s economy in 2021 is approaching $ 16 trillion. Merkel said that maintaining closer trade and economic ties with a colossal booming economy like that of China has significantly helped Germany and Europe, allowing the German people to lead fairly well-off lives during the 16 last years of his reign.

Merkel is a visionary leader of the world. During her long tenure, she showed great interest in China, visited many Chinese cities, large and small, fairly developed or underdeveloped, saw China’s sprawling urbanization process with her own eyes. , the government’s relentless efforts against poverty, the functioning of companies and innovation laboratories, the diligence and cohesion of Chinese workers, which has allowed it to know the untapped strength of the economy.

However, many Western politicians are fearful and nervous about China’s rapid progress in a short period of time, while a multitude of American media commentators continue to pour cold water on China’s future growth. In their eyes, China’s development is not sustainable, and some, again, have predicted that the Chinese economy will collapse or even collapse.

China’s economic performance over the past 40 years has consistently proven them wrong. In fact, the Chinese economy is in better shape than that of the United States, which is facing a prolonged attack from the Delta variant, seriously slammed supply chains, faltering consumption and mounting inflationary pressure. The combination of slower growth and faster inflation is causing headaches for the Federal Reserve, because if the US central bank is forced to raise rates to curb inflation, the fragile US economy will be even worse. deviated.

In comparison, the Chinese economy is currently changing course to make the transition to high-equality growth that pivots towards creating market demand for new technologies while harnessing the massive purchasing power of Chinese consumers. And the country is taking the initiative to lead the transition and the change.

As conceived by policymakers, starting this year – the first year of the 14th Five-Year Plan, a series of macro-control mandates have been issued to regulate real estate, tutoring and the giant platform based on Internet. companies like Alibaba, Ant, Didi, Tencent and Meituan, which have leveraged their technologies and market scale to engage in monopoly maneuvers to stifle competition.

The Chinese government knows that for many years the high price of townhouses and children’s education has been “two mountains” dominating more than 500 million middle-class citizens, which has seriously inhibited their power of development. ‘purchase. This year, the central government ordered the shutdown of private tutoring companies so that average urban families could save $ 500 per month.

China has formulated broad policy tools to reduce bank lending to real estate developers and implement a pilot property tax levy program to prevent real estate investors and speculators from hoarding properties – a move that will play a central role in the reduction of uncontrollable housing costs. Housing prices in China’s first and second-tier cities are estimated to fall by 10-20% over the next five years.

Affordable education and housing will significantly ease the financial burden on Chinese families and, with wages steadily rising, establish a solid foundation for boosting domestic consumption. China is set to become the world’s largest consumer market once the 14th Five-Year Plan is fully implemented, with the middle class taking the lead in spending. In the third quarter of this year, consumption contributed 64% to China’s economic growth, which will rise to over 70% by 2025.

Once again, China’s unique system of centralized governance will play a decisive role in the structural overhaul of the economy. The reform may have an impact on real estate development and economic growth in the short term, as evidenced by the slower growth rate of 4.9% in the third quarter, but in the long term it will significantly improve the fundamentals of the economy. Chinese and will maintain a relatively higher growth rate. .

Looking across the Pacific Ocean, US President Joe Biden’s $ 3.5 trillion budget spending bill remains hotly contested on Capitol Hill as the year draws to a close. Systemic bureaucracy and partisan backbiting in Washington have made economic legislation dangerously slow. To make matters worse, American wealth is increasingly funneled into Big Tech and Wall Street – isolating much of the workforce working in other industries and making their lives more difficult.

The author is an editor at the Global Times. [email protected]

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