China Daily:
Recently, various international and business institutions have raised their expectations for China's economic growth, saying that China will remain the largest contributor to the global economic growth engine. What is your perspective on this, and what trends do you anticipate for China's economy in 2024? Thank you.
Kang Yi:
Thank you for your question. The outlook for China's economic trajectory in 2024 is a matter of significant interest to everyone. 2024 marks the 75th anniversary of the founding of the People's Republic of China and is a crucial year for implementing the country's 14th Five-Year Plan (2021-2025). When forecasting this year's economic trends, it's crucial to acknowledge the potential challenges and difficulties. However, the predominant factors will lean towards favorable conditions and advantages. The fundamentals underpinning China's long-term growth remain unchanged, with factors supporting high-quality development accumulating and increasing. Therefore, we predict that China's economy will continue to rebound and improve in 2024, driven by five favorable conditions:
Firstly, positive momentum in economic growth. In the four quarters of 2023, GDP exhibited positive year-on-year and quarter-on-quarter growth, expanding quarter by quarter. This upward trend is quite favorable. In addition to the statistical accounting of economic aggregates, the NBS also monitors and compares various physical indicators. From the perspective of physical indicators, the absolute volumes of metrics such as electricity consumption, output of major industrial products, investment, and import-export significantly surpassed 2019 levels. Some physical volume indicators, mainly associated with the output indicators of the real estate-related sector, were lower than the pre-pandemic levels in 2019, as we mentioned earlier. This also indicates an overall improvement in our economic performance. International organizations have raised their forecasts for China's economic growth, with the International Monetary Fund increasing their predicted growth by 0.4 percentage point and the Organization for Economic Cooperation and Development raising theirs by 0.1 percentage point. This indicates optimism in the international community regarding China's economic development prospects in 2024.
Second, the Chinese economy has enormous resilience. Our country boasts a strong industrial foundation, being the only nation that possesses all industrial categories as classified by the United Nations. The complementary capabilities and integrated advantages of our industries remain prominent. The added value of our manufacturing sector accounts for nearly one-third of the world's total, and our goods exports make up approximately one-seventh of the global share. Meanwhile, our country's infrastructure networks, including transportation and communications, are becoming increasingly sophisticated. Weak links in areas such as education and healthcare are continuously being reinforced, and the supply quality of factors such as talent and funding is significantly improving. The assurance capabilities in key areas such as food and energy security, as well as industrial and supply chains have been greatly improved. These efforts have enhanced the resilience and flexibility of our country's economic development, providing the confidence for sustained and far-reaching economic stability.
Third, China's high-quality development is vibrant and dynamic. With new industries witnessing rapid growth, emerging formats displaying positive signals, accelerated nurturing of new models, constant optimization of economic structures, and ongoing upgrading of driving forces, there is an anticipated release of potential to further stimulate economic development. In 2023, the added value of the service industry accounted for 54.6 percent of the gross domestic product (GDP), contributing to economic growth with a rate surpassing 60 percent. Investment in the upgrading of manufacturing technologies increased by 3.8 percent, and high-tech industry investment grew by 10.3 percent, surpassing the overall growth rate of fixed asset investment. More importantly, China is consistently promoting innovation-driven development. The Chinese economy has been growing bigger and stronger as it accelerates the cultivation of new productive forces.
Fourth, China's reform and opening up has yielded substantial economic benefits for enterprises. Our country has upheld and further improved the basic socialist economic systems and worked unswervingly both to consolidate and develop the public sector and encourage, support and guide the development of the non-public sector. China has intensified its endeavors to establish a national unified market, advanced the development of high-standard market systems, and enhanced the business environment so as to create a favorable competitive environment for various types of enterprises. All these efforts are conducive to further stimulating the enthusiasm and creativity of different entities, including foreign-funded enterprises. In the first 11 months of 2023, the year-on-year increase in the number of newly established foreign-invested enterprises reached 36.2%, consistently unleashing the dividends of opening up.
Fifth, China boasts ample room for implementing macroeconomic policies. The policy effects introduced in 2023, such as issuing additional national bonds, tax reduction, fee reduction, and adjustments to reserve requirements and interest rates, will continue to unfold throughout this year. This year, there will also be further optimization of some new measures in reserve. The combined efforts of these new incremental measures and existing policies will provide strong support for the stable operation of the economy. Currently, our country maintains a low level of government debt and inflation rate. The policy toolkit is continually being strengthened, providing considerable flexibility in fiscal, monetary, and other policies. There are conditions and room to vigorously implement macroeconomic policies.
Although we will likely encounter some difficulties and challenges in promoting the sustained recovery and improvement of the economy in 2024, the recent Central Economic Work Conference thoroughly analyzed those issues and proposed specific measures to address those difficulties and challenges. We must comprehensively implement the deployment of the Central Economic Work Conference, and continuously transform development advantages into development momentum. This year, the Chinese economy is certain to forge ahead despite difficulties and challenges, and achieve both effective qualitative improvements and reasonable growth. Thank you.
