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China Economic Snapshot

Economic Forecast Summary (December 2021)

Economic growth will reach 8.1% this year as the economy rebounds, but will slow to 5.1% in 2022 and 2023. The swift recovery, driven by strong exports on the back of re-opening of overseas economies and robust investment, has stalled in the second half of the year. A large real estate company’s default is shaking financial markets and confidence in the sector, thereby weakening real estate investment, an important engine of growth. Prospects for manufacturing investment have also worsened due to temporary power cuts in a large number of provinces. Consumption growth is stable, but adverse confidence effects coupled with inadequate social protection still hold it back. Consumer price inflation is low as there is only limited pass-through from surging prices in upstream industries.

Reform Priorities (April 2021)

Going for Growth 2021 - China

The pandemic highlighted weaknesses in the health and social security systems and pushed many households and firms to the brink of bankruptcy. It further widened inequalities between: (i) central provinces and the coast; (ii) already indebted poor households and wealthier ones and (iii) the private sector, with limited access to infrastructure contracts and hardly hit by slackened demand, and the state-owned sector. Such divides need to be addressed to make growth inclusive and sustainable.

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2021 Structural Reform Priorities

  • Health care: Reduce the share of out-of-pocket payments of healthcare costs to limit the burden on the poor
  • Labour market: Facilitate labour mobility and improve skills provision to foster reallocation
  • Competition and regulation: Strike a better balance between liberalisation and regulation in financial markets and level the playing field
  • Governance and rule of law: Combat non-compliance with laws and regulations
  • Environmental policy: Increase ambition and enforcement of environmental policies

 

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Economic Survey of China (April 2019)

Executive Summary

 

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站在十字路口的中国经济