The 5.5% Growth Target Conforms with Realities

By Lily Wang

This year’s Government Work Report proposed that GDP is expected to grow by about 5.5%； CPI is expected to increase by around 3%； the growth in personal income is basically in step with economic growth. In this regard， many economists said that the economic growth target of about 5.5% is active， and neither aggressive nor conservative.

More initiative needed for economic growth

At the “Economic Seminar Monthly” held by the CIEEC （China International Economic Exchange Center） on March 14， Yang Weimin， Vice Chairman of the CIEEC and Deputy Director of the Economic Committee of the CPPCC National Committee， described the economic growth target of about 5.5% as “seeking truth from facts”.

“In the Government Work Report， there is no separate chapter to discuss macro-economic policy. It is combined with annual tasks. The Report emphasizes that macro policy should be stable and micro policy should be flexible； it generally points out the basic direction of fiscal， monetary and employment policies； it specifically expounds the requirements of more scientific and accurate pandemic prevention and control. In order to achieve the 5.5% target， the pandemic is still the biggest uncertainty， both in China and the world，” said Yang Weimin.

The Government Work Report proposed to reduce the production and operation costs of enterprises and guide large platform enterprises to reduce charges. Han Yongwen， Vice Chairman of the CCIEE， said that during the deliberation of the fifth session of the 13th National People’s Congress， this part fully incorporated the suggestions of NPC delegates from the business field. “In the course of deliberation， many business delegates proposed that the central government’s support for the real economy， especially the preferential tax treatment of the manufacturing industry， shall be extended to the commercial field. In the past two years， the commerce， catering， accommodation， tourism and other industries have been suffering more from the pandemic compared to the manufacturing industry. Also， in order to stabilize the real economy and boost the manufacturing industry， the central government has made some preferential tax and fi-nancial policies. The delegates hope that such policies shall be extended to more industries this year.”

Han also commented that considering the market potential and policy measures of the Chinese economy， “it is believed that the 2022 economic growth target will be reached and the final growth rate may be higher than 5.5%.”

Wang Yiming， Vice Chairman of the CCIEE （China Center for International Economic Exchanges） and member of the CPPCC， said that according to a previous survey， the resilience of China’s economy is beyond imagination. He said that China is confident about setting the 5.5% economic growth target. But he also pointed out， “China is still facing triple pressures： demand contraction supply shocks and weakening expectations. The situation may be compounded by the imported inflation and risks in economic and financial fields. All these challenges shall be overcome through hard work to realize the 5.5% target. So it is important to increase policy support and have more initiatives to empower the growth of the Chinese economy.”

Endeavor to stimulate market vitality

“Besides policy support， the sustainable growth of the Chinese economy still requires the stimulation of market vitality and development of driving forces，” Wang Yiming said， mentioning that in the future it is important to focus on high-tech industries， the digital economy as well as the green and low-carbon industry.

When talking about risks and challenges for the economy， Yang Weimin said that the Covid-19 pandemic is still the biggest risk to the world economy. How to take control of the pandemic accurately and minimize the impact on the economic operation is one of the biggest challenges. Second， it is important to follow the changes of the international political situation and the impact on the prices of energy， commodity goods and grain. These changes will bring new uncertainties for the world and Chinese economy. The third is the real estate. In the past real estate was one of the driving forces of economic growth. It is imperative to change the model of high dependence on real estate， the financial institutions and local government to boost infrastructural investment. But the measures shall be mild in the short run. The third is consumption. There are both shortterm and long-term factors impacting the consumption. For the short-term， the pandemic is one of the uncertainties.

This year， the deficit ratio has been reduced by 0.4%. In this regard， Wang Yiming believes that although the deficit ratio is lower than last year， the scale of expenditure will increase by more than RMB 2 trillion compared to last year. As is shown in the budget report， national general public budget expenditure is expected to increase by 8.4% this year and last year the actual yearon-year increase was only 0.3%.From this perspective， the intensity of fiscal policy is significantly greater than last year. “Policy support has increased， not decreased，” Wang Yiming said.

As for the fiscal and monetary policy， Wang Yiming said that fiscal policy reflects the characteristics of “increased expenditure， simultaneous reduction and returns， stable special bond and allocation of financial resources to grassroots level”. The monetary policy reflects the characteristics of “sufficient total amount， optimized structure and reduced cost”.

In terms of employment policy， Wang Yiming believes that small and medium-sized enterprises are the main job creators. To stabilize these enterprises will stabilize the fundamentals of the employment. The macro policies shall support job creation and the most important is to support small and medium-sized enterprises. For the structural employment pressure， the macro policies shall also be structural and offer specific support for those target industries.

Yang Weimin believes that the last decade has witnessed the fastest change in China’s industrial structure. The proportion of China’s manufacturing industry has decreased and the proportion of the service industry has increased. The reason why China’s economy can create a large number of jobs while its growth slows down is related to the big changes in the employment structure. He suggested that China should focus more on the employment of college graduates and implement the policy of tax and fee reduction. For the service industry， the improvement of corporate forecasts is more important. It is necessary to further standardize the industrial policies so that enterprises will have clear expectations for the future. Then more jobs will be created.

Wang Yiming said that during the 14th Five-Year Plan period， the digital transformation of China’s manufacturing industry will undergo further expansion. We shall strengthen top-level design， continue to promote the digital transformation， network-based coordination and intelligent reform of the manufacturing industry， and accelerate the construction of intelligent manufacturing ecology. We shall strive to achieve digitization and networking of most manufacturing enterprises above designated size and initial digital transition of backbone enterprises in key industries by 2025.

“Seizing the opportunity of the new round of scientific and technological revolution and industrial transformation in the world and accelerating the digital transformation of China’s traditional industries are not only conducive to seizing the commanding heights of future development and building new advantages in international cooperation and competition， but also conducive to effectively neutralizing the impact from rising labor costs， activating the innovation ecology， improving production efficiency and enterprise profitability as the Chinese economic growth slows down and factor costs rise. It will trigger the economic reform in quality， efficiency and driving forces and inject new momentum into the high-quality development，” he said.