New policy mix to propel turnaround in China's economy

Aerial photo taken on Dec. 5, 2021 shows the sunrise scenery of the Yangpu international container port at Yangpu economic development zone in south China's Hainan Province. [Xinhua/Pu Xiaoxu]

BEIJING -- With a new policy mix unveiled at a meeting last week, China, the world's second-largest economy, is ramping up efforts to ensure an overall recovery next year despite the looming shadow of a global economic recession.

According to the tone-setting annual Central Economic Work Conference, the country will continue to implement proactive fiscal policy and prudent monetary policy next year. Meanwhile, China will intensify macro-control and coordinate various policies to form synergy for high-quality development.

"We have the confidence, conditions and capacity to turn China's economy for the better as a whole," said Han Wenxiu, executive deputy director of the office of the Central Committee for Financial and Economic Affairs.

CONSUMPTION A PRIORITY

Policymakers underlined the role of consumption at the meeting in Beijing on Dec. 15 and 16.

China will focus on boosting domestic demand by prioritizing the recovery and expansion of consumption, increasing urban and rural personal income through multiple channels, and encouraging more private capital to participate in the construction of key national projects, said the meeting.

Weighed down by the COVID-19 epidemic, household consumption only grew 4.4 percent annually in the past two years, said Ning Jizhe, deputy head of the Committee on Economic Affairs of the National Committee of the Chinese People's Political Consultative Conference.

Ning expects restored consumer spending to play a fundamental role in economic development.

Looking forward, consumption will be supported in housing improvement, new energy vehicles, elderly care, and educational, medical, cultural and sports services. A rebound in contact-based consumption can be expected, and new consumption forms that are green and low-carbon will also gather steam.

Stronger macro policy regulation and optimized epidemic response will be a boon for promoting consumption recovery and increasing domestic demand next year, thus helping the economy perform within a reasonable range.

UNWAVERING OPENING UP

In the face of a sluggish world economy and rising protectionism, policymakers reiterated the unchanged commitment to opening up.

Greater efforts will be made to attract foreign capital, widen market access, promote the opening-up of modern service industries, and grant foreign-funded enterprises national treatment. China will actively seek to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement.

Long Guoqiang, deputy head of the Development Research Center of the State Council, stressed the importance of improving the business environment.

More should be done to align high-standard economic and trade rules and steadily expand institutional opening up regarding rules, regulations, management and standards, Long said.

As evidence of the country's opening-up pledge, foreign direct investment in the Chinese mainland went up 17.4 percent year on year to 168.34 billion U.S. dollars in the first 10 months of this year.

With continued opening steps, analysts believe foreign businesses operating in China will enjoy a shorter negative list for investment and better protection of intellectual property rights, and will continue to achieve mutual development with the country.

A SUSTAINABLE PROPERTY SECTOR

One of the salient arrangements made at the meeting was to defuse risks in the property sector and promote its sustainable development.

China will ensure timely deliveries of pre-sold housing and meet the reasonable financing demand of the sector. In particular, the risks of leading developers will be effectively prevented and defused, according to the meeting. People's basic housing needs and the need for improved housing will also be satisfied.

Under the principle that "housing is for living in, not for speculation," the related financial regulatory system will improve, and the financial support for the property sector will strengthen, said Liu Guoqiang, deputy governor of the People's Bank of China, the central bank.

As a pillar industry of the economy, the property sector contributes 7 percent of the country's gross domestic product and nearly half of the fiscal resources of local governments. Real estate accounts for 60 percent of urban household assets, and property loans, plus those with real estate as collateral, made up 39 percent of banks' outstanding loans.

Analysts expect the new policies will help the real estate industry realize a smooth transition to new development models and realize healthy, sustainable development.