China's economic recovery instills confidence in global growth

Visitors learn about a 800V dual-motor drive system for the new energy vehicle (NEV) at an exhibition on the sidelines of the 2024 World Power Battery Conference in Yibin, southwest China's Sichuan Province, Sept. 1, 2024. (Xinhua/Tang Wenhao)

In a world of mounting uncertainties, China is injecting certainty into the global economic landscape with a mix of targeted and effective policies that sustain a steady recovery and unleash new growth drivers.

Building up its impetus of high-quality development, the country has reinforced its role as a world growth engine while strengthening the global industrial chains and spearheading the global green transformation.

RECOVERY GAINING STEAM

Chinese authorities have introduced a range of measures to stimulate growth this year, including a program that promotes large-scale equipment upgrades and consumer goods trade-ins, and the issuance of ultra-long special treasury bonds. A raft of incremental policies have been rolled out since late September to intensify counter-cyclical adjustments, support businesses and boost market expectations.

The economic effect of these measures has been clear. In October, retail sales climbed 4.8 percent year on year, accelerating from September's 3.2 percent increase, official data showed.

Offline consumption, particularly in dining and lodging, recorded double-digit growth, signaling strong consumer activity. Additionally, online retail sales of home appliances grew over 40 percent for two consecutive months, driven by incentives targeting the replacement of older products with new, energy-efficient models.

Experts believe these measures will drive further gains in the months ahead. "The recent pro-growth policies effectively address insufficient demand. During the fourth quarter, traditionally a peak consumption season, these steps will further demonstrate their impact by supporting and accelerating consumption growth," said Lian Ping, president of the China Chief Economist Forum.

In addition to the rise in consumption, statistics showed marked recovery in other key economic indicators including foreign trade and manufacturing activity for the past month, as well as steady performance in investment and industrial production.

Based on the improved recovery momentum, multiple foreign institutions, including UBS and Goldman Sachs, have revised up their China 2024 growth forecasts.

With its GDP expanding 4.8 percent year on year in the first three quarters of the year and on course to realize an annual growth target of around 5 percent, China remains the biggest growth engine of the world economy.

The incremental policy package has played a positive role in driving sustained economic recovery and improvement, further strengthening international investors' confidence in holding Chinese assets, noted Mark Wang, president and CEO of HSBC Bank (China) Company Ltd.

BOOSTING GLOBAL INDUSTRIAL CHAIN

Investments in high-tech manufacturing and services have surged in China, bolstering sectors like green technology, digital economy, and modern infrastructure, and contributing to the resilience and upgrading of the global industrial chains.

Data from the National Bureau of Statistics (NBS) highlights the acceleration of innovation-driven growth. In October, the value-added output of high-tech manufacturing industries grew by 9.4 percent year-on-year, with sub-sectors of intelligent drones, electric vehicles and solar cells soaring by 41.9 percent, 48.6 percent, and 13.2 percent, respectively.

Wang Qing, chief macro analyst at Golden Credit Rating, attributed the growth to robust policy support. "Local authorities are focusing on cultivating new productive forces through increased spending on sci-tech innovation in a race to sharpen their industrial competitive edges," Wang noted.

NBS data showed investments in high-tech industries increased by 9.3 percent over the first ten months, far outpacing the growth of overall investments and reflecting China's commitment to fostering innovation and modernizing supply chains.

"China is constantly upgrading traditional industrial chains, filling in gaps, and building new ones to strengthen stability and competitiveness. This resilience places China's industrial chain among the world's most indispensable," observes Yan Kun, researcher and deputy director of the Center for Public Finance and Taxation Research with the Chinese Academy of Social Sciences.

As the world's largest manufacturing hub and a country with a complete industrial system, China has continuously encouraged innovation, which helps advance the high-quality development of its foreign trade, noted Zhang Jianping, vice president of the China Research Association of Social and Economic System.

Trade with Belt and Road partner countries and the Regional Comprehensive Economic Partnership (RCEP) countries has been particularly strong. In the first 10 months, China's trade with countries participating in the Belt and Road Initiative climbed 6.2 percent compared with a year earlier, while its trade with other RCEP countries was up 4.3 percent, official data showed.

LEADING GREEN TRANSITION

China has emerged as a global leader in green development, making significant strides in clean energy and sustainable technologies. With a rising "green quotient" in its social and economic development, China is among the countries that have achieved the fastest reductions in energy intensity, largely due to the rapid expansion of its new energy sector.

New energy vehicles (NEVs) are a standout example of the country's green development vitality. China's NEV output and sales both surpassed 9.7 million units in the first ten months. In October alone, NEVs accounted for 46.8 percent of the domestic automotive sales.

China's new energy push has had positive effects around the globe. In 2023 alone, its wind and solar power products helped other countries reduce about 810 million tonnes of carbon dioxide emissions, enabling them to access clean, reliable and affordable energy.

Noting the development of new energy is crucial for tackling climate change, Yan believes that the demand for new energy products will continue to grow, with huge future potential in the future.

"By continuing to provide the world with affordable, high-quality capacity, China's new energy industry is making important contribution to the global green development," Yan said.