In 2021, the national economy was on the whole stable and improved

2022-06-22 0 By

The year 2021 is the first year of the 14th Five-Year Plan. China is transforming from traditional factor-driven development to innovation-driven development, and from open development to a new pattern of domestic and international development.Economic development is confronted with multiple challenges of medium – and long-term structural transformation and short-term stable growth and risk control.According to the 2021 national economic performance released by the Information Office of The State Council on January 17, despite uncertainties in the external environment, China’s macro economy still showed strong resilience. The annual GDP reached 114.37 trillion yuan, an increase of 8.1% over the previous year and an average growth of 5.1% over the past two years. The economy recovered steadily and the economic structure continued to optimize.First, the recovery of China’s three major industries is evident.Among them, the growth of the primary industry was significantly higher than before the epidemic, with the added value of the primary industry reaching 8.3 trillion yuan, an increase of 7.1 percent over the previous year.The secondary industry registered strong growth, with the added value of 45.1 trillion yuan, an increase of 8.2 percent over the previous year.However, continuing the gradual return to normal industrial growth in the fourth quarter, the year-on-year growth rate of industrial production slowed to 4.3 per cent in December.The tertiary industry was gradually restored, with its added value reaching 61 trillion yuan, an increase of 8.2 percent over the previous year.But the pace of recovery in different sectors has diverged.The business activity indexes of telecommunications, radio, television and satellite transmission services, money and financial services, and capital market services remained in a relatively high economic range, while the accommodation and catering industries, transportation, storage and postal services were subject to decline risks.Second, innovation-driven development has continued to improve.The added value of high-tech manufacturing and equipment manufacturing grew by 18.2 percent and 12.9 percent respectively, 8.6 and 3.3 percentage points faster than those of industries above designated size.The output of new-energy vehicles, industrial robots, integrated circuits and microcomputer equipment increased by 145.6 percent, 44.9 percent, 33.3 percent and 22.3 percent, respectively.Investment in high-tech industries grew by 17.1%, 12.2 percentage points faster than total investment.Social RESEARCH and Development (R&D) Expenditure increased by 14.2% over the previous year, continuing the trend of double-digit growth since the 13th Five-Year Plan;The ratio of r&d spending to GDP reached 2.44%.Third, the global supply center effect continues to maintain.The import and export of goods continued to grow strongly, and the trade structure continued to improve.Imports and exports of goods totaled 39 trillion yuan, an increase of 21.4 percent over the previous year. The trade surplus in imports and exports of goods expanded 20.4 percent over the previous year to 4.4 trillion yuan.Trade in goods has a strong driving effect on China’s year-on-year economic growth.In 2021, net exports of goods and services contributed 1.7 percentage points to economic growth and contributed 20.9 percent to economic growth, strongly supporting the normalization of The Chinese economy.Fourth, the recovery of fixed asset investment and consumption is weak.China’s fixed asset investment reached 54 trillion yuan, an increase of 4.9% over the previous year.The two-year average growth was 3.9 percent, down from 1.5 percentage points in 2019.Investment in infrastructure grew by 0.4%, while investment in real estate development grew by 4.4%, leading to a slowdown in fixed-asset investment.While manufacturing investment recovered strongly, up 13.5 per cent, it was not strong enough to make up for slower growth in infrastructure and property investment.Retail sales of consumer goods totaled 44 trillion yuan last year, an increase of 12.5% over the previous year and an average growth of 3.9% over the past two years, far from recovering to the 8% growth rate of 2019, and consumer spending is likely to remain sluggish.Finally, the price trend of supply and demand is differentiated.Affected by the rise in international commodity prices, the producer price index rose by 8.1% in 2008, while the consumer price index rose by 0.9%.Squeezed by rising costs and declining demand, the profit margins of middle and lower producers are shrinking, especially for small and medium-sized enterprises.In the face of multiple pressures such as changes in international epidemic prevention and control policies, frequent extreme weather events and risks of economic structural transformation, China will face considerable challenges in normalizing its macro economy for the following three reasons:First, it is expected that major Western countries will fully liberalize epidemic prevention policies in 2022, which will lead to the readjust and rebalancing of the global industrial chain and supply chain, and bring great challenges and uncertainties to the operation logic of China’s macro-economy. We need to be prepared for the decline in import and export trade.Second, rising international commodity prices have led to a further increase in producer prices, while the fall in consumer prices reflects consumers’ lack of confidence in the future income of people. Consumer spending has become more conservative, which is not conducive to the recovery of production and operation of small and medium-sized enterprises.We may consider introducing tax and fee cuts for small and medium-sized enterprises and income subsidies for low – and middle-income residents to ease the pressure on business operations and capital flow and boost consumer confidence.Third, China’s economic structural transformation has entered the deep water zone. In the process of replacing old drivers of growth with new ones, there is not only the loss of short-term supply capacity, but also the risk of declining potential growth capacity.To steady hand growth in prominent position, current macroeconomic policy should pay more attention to the classification precision control, avoid all kinds of structural policies of prospective superimposed on the negative impact of macroeconomic recovery, avoid too fast exit scale policy, maintain a sustained economic recovery situation remains the same, keep the economy running within a reasonable range.(Editor: Wang Xin)