CHINESEECONOMIC PROSPECTS IN 2022

BianYongzu

The Chinese economy is estimated to have maintained a high growth rate of about 8 percent with the COVID-19 pandemic basically under control in 2021. At the same time, the triple pressures of demand contraction, supply shock, and weakening expectations gradually emerged as the quarterly economic growth rate endured an obvious downward slope, an indication that China’s economic development will face more difficulties in 2022. Therefore, the Central Economic Work Conference held in December 2021 noted that economic work should “prioritize stability while pursuing progress,” which set “stability” as the tone for economic development in 2022.

The internal and external environment for China’s economic development in 2022 will be very different from 2021. From a global perspective, the international macroeconomic environment is getting more complex and volatile. Although the world economy achieved a solid rebound in 2021, inflation has become an obvious problem in the United States and some other countriesbecause of years of loosemonetary policy and the impact of the pandemic on the globalindustrial chain. This trend isalso accelerating the pace ofmonetary policy shift. At thesame time, more and morecountries are implementinga policy of coexistence withthe virus to restart theireconomies. External demandfor Chinese commodities mayweaken.

From an internalperspective, the Omicronvariant has exerted morepressure on China’s “dynamic zero-case” policy (the strategy to clear COVID-19 infectionsin a timely manner). Adelicate balance betweenpandemic containment andeconomic development isrequired to ensure basicsmooth performance ofthe economy. Meanwhile,against the backdrop ofaccelerated economicstructure transformation,the triple pressure that China faces internally will becomeincreasingly heavy.

It can be foreseen thatChina’s economic development will grapple with greatpressure in 2022. However, the Chinese economy has takenthe lead in rebounding andrecovering from the pandemicwith relatively smooth andorderly operation of its supplychain and industrial chain,fully demonstrating the greatpotential of the Chinesemarket and the resilienceof its economy, which willcontribute to its domesticgrowth and global competitive advantage. Therefore, on thebasis of “stability,” the Chinese economy is most likely tomaintain medium-high growth in 2022.

How will the Chineseeconomy “prioritize stabilitywhile pursuing progress?”First, it is necessary to createa better external environmentwith flexible and prudentmonetary policy for economicgrowth. Second, it is imperative to use proactive fiscal policyto improve domestic demandand support stable economicdevelopment. Additionally, itwill be important to strengthen endogenous impetus toprovide more guarantees forthe “sustained” growth of theChinese economy.

Improvement of theChinese government’seconomic governance is a basic prerequisite for achievingsustained economic growth. To maintain high-speed and high- quality economic development, it is essential to strike a balance between speed and qualityand efficiency and fairness ofgrowth, refrain from sacrificing long-term goals for short-termgains, prevent fragmentationof systematic goals, and avoidsystemic financial risks.