苏剑：经济内生动能持续释放，实现全年增速目标无忧 - 2021-05-11

Su Jian
With effective control of the COVID-19 pandemic and orderly and steady economic recovery in China, the macroeconomic indicators generally showed a V-shaped recovery in 2020. Although the GDP growth rate in 2020 was only 2.3% year on year, which was much lower than previous years, China was the only major economy that achieved positive economic growth worldwide. Looking to 2021, we believe that the Chinese economy will continue to rebound in the post-pandemic era. Despite the increase in total demand slowed down in January and February due to the short-term impact caused by the pandemic in the winter, the endogenous driving force of the economy continued to be released both on the production side and on the demand side according to the PMI data in March. In addition, as more people get vaccinated, the disturbing factors brought by the pandemic will gradually reduce. Under the low base effect of last year, the economic growth in the first quarter rebounded sharply, so there is no need to worry about the worry about the annual GDP growth target.
In terms of supply, the added value of industrial enterprises above designated size in January and February 2021 increased by 35.1% year on year in real terms, which was 16.9% higher than the figure for 2019 during the same period. The average growth rate for the two years was 8.1%, and the growth of industrial production accelerated. As people pay more attention to pandemic prevention and control, and more people get vaccinated, the impacts of the COVID-19 pandemic on China’s economy and society will gradually weaken, industrial production and sales will return to normal, corporate income and profits will show a faster recovery, and industrial added value will grow steadily, moderately and continuously. Looking to 2021, due to the low base effect in the first quarter, the growth rate of industrial added value is expected to surpass 30%, and then gradually return to normal. It’s expected to that the quarterly growth rate will remain at about 7% year on year, and the annual growth rate of industrial added value for the year will hit 10% year on year, helping the country reach the annual GDP growth target.
In terms of consumption, under the policy guidance during the COVID-19 pandemic, industrial digital transformation has accelerated. New consumer demands such as online education, smart travel, and “Internet + medical health” have led to continuous increase in consumption this year. Meanwhile, as the pandemic has been basically put under control, consumption of services such as catering, tourism and entertainment will gradually return to normal levels this year. In addition, data show that national per capita disposable income in 2020 increased by 2.1% in real terms. The continuous increase in per capita disposable income will continue to boost consumption this year.
In terms of investment, in the context of gradual economic recovery, returns of investments in manufacturing have rebounded significantly. In addition, as the goal of achieving carbon neutrality has been put on the agenda, energy-intensive industries are faced with urgent tasks of transformation and upgrading, replacement and upgrading of mechanical equipment, and demands for new energy vehicles will further expand. All these factors will promote the investments in manufacturing this year. Demands on the non-manufacturing market have also increased. The new orders index in the construction industry is 59% this month, an increase of 5.6 percentage points over the previous month, which indicates that investments in infrastructure construction and real estate are expected to speed up.
In terms of imports and exports, amidst global economic recovery and the continuous effect of export substitution in the first half of 2021, export markets will continue to thrive. With the acceleration in delivering COVID-19 vaccine shots, manufacturing production in developed countries is expected to return to normal in the second half of the year. By then, China’s export substitution effect will weaken. The production index and new orders index in March were 53.9% and 53.6% respectively, 2 and 2.1 percentage points higher than the previous month. This indicates that expansion of manufacturing production and demands has accelerated, and that the endogenous driving force of the economy has become stronger, which will make up for the weaker export substitution effect and promote import and export growth. There may be sporadic recurrences of the pandemic at home, but it’s unlikely to see large-scale lockdown, and the impact on the economy is rather limited. However, the pandemic situation remains uncertain abroad. The impact of trade protectionism on globalization is a risk that we need to pay attention to and that will affect imports and exports.
Therefore, whether it’s from the supply side or the demand side, the endogenous driving force of China’s economy will continue to be released. In the future, balanced development on the supply and demand sides will be gradually achieved. Besides, by virtue of China’s institutional advantages and the people’s concerted efforts, the impact on the economy caused by the pandemic will further reduce and even disappear. Hence, there is no need to worry about the GDP growth target of 6% in 2021.
(Author: Su Jian, Professor and PhD Supervisor of School of Economics at Peking University, Director of China Center for Economic Research at Peking University, Chairman of Beijing Foreign Economics Institute)