China to present a strong economic performance
First Voice
China to present a strong economic performance

Editor's note: CGTN's First Voice provides instant commentary on breaking stories. The daily column clarifies emerging issues and better defines the news agenda, offering a Chinese perspective on the latest global events. This is part III of a special series on China's COVID-19 situation, rebutting Western media's argument of a dismal 2023 economic performance in China. 

How will China's economy perform in 2023? This blockbuster question seems to have been getting a similar answer among the Western press. An overarching argument has been that China's economic development will be hampered by the surging COVID-19 infections on account of changes in China's COVID-19 policy. Even a recent AP article, which stipulates that the Chinese economy is recovering, has spent the better part of the piece arguing that "entrepreneurs and families face a painful squeeze from a surge in virus cases" and that business are scrambling to adapt to the new situation.

In the short term, it is certain that the China's economic operation is challenged by the surging cases and people having to stay home to recover. But economic development is a long-term endeavor. How will China's economy perform in the long-term? Three realities need to be considered.

Reality 1: Policies that will unleash higher potential

China to present a strong economic performance

Zhao Chenxin, a deputy director of the National Development and Reform Commission, said that China will strengthen policy coordination across the year, taking steps to unleash policies introduced that will have a big impact in the second half of 2022.

In December 2022, China's Central Economic Work Conference laid out recommendations in its report about the future of China's economic growth. China will encourage private enterprises, micro, small and medium business entities. Small and medium enterprises account for about 90 percent of China's enterprises, contribute to more than 50 percent of the taxes, 60 percent of the GDP and 70 percent of the technological innovations.

It also proposed using targeted expansionists fiscal, monetary programs and policies – meaning, supporting the economy where necessary. "We need to encourage and support the private sector economy and private enterprise in terms of policy and public opinion," the report said.

And at a national conference held at the end of December 2022, Minister of Finance Liu Kun called for efforts to leverage the proactive fiscal policy in a more direct and effective manner, fine-tune supportive policies for enterprises and boost confidence of the market.

Shan Hui, the chief economist at Goldman Sachs China, said in an interview that "while the initial phase of re-opening may hurt growth, the rebound thereafter should be significant."

Reality 2: Rapid restoration of economic and social lives

China to present a strong economic performance

The Office of the Central Financial and Economic Affairs Commission said that the restoration of China's economic and social order will restore enormous vitality, facilitate economic circulation and accelerate growth.

The rebound is accelerating. On New Year's Eve, people were out and about in droves. Sha Jingjing, the manager of a hotpot restaurant in Beijing's Chaoyang District, said people started to queue at noon. "We received over 1,000 indoor diners on that day, which gave us more confidence for our business," Sha said.

Yang Xiulong, the board chairman of the Beijing Yan Restaurant, expressed the unexpected speed of the recovery process. "I thought it would take some time for the catering industry to recover. But, given the current situation, I believe this recovery process will definitely be accelerated," he said.

In Shanghai, the total offline consumption from December 31, 2022 to January 1, 2023 hit 12.01 billion yuan ($1.74 billion), according to the Consumer Market Big Data Laboratory.

Tourism industry shares similar surge. The Sanya Tourism Promotion Board showed that since the New Year's Day holiday, the popular vacation destinations saw the average occupancy rate of its tourist hotels exceeding 75 percent, an increase of nearly 9 percent from the previous month. In Haitang Bay and Yalong Bay where many five-star hotels are located, the rate witnessed a 7 percent increase to around 85 percent.

According to the Ministry of Transport, the upcoming Spring Festival travel will see the number of passenger trips surging 99.5 percent year on year to nearly 2.1 billion, resuming to about 70.3 percent of the same period in 2019. A report from Trip.Com Group showed a 45 percent year-on-year increase in travel product bookings and a 53 percent increase in per capita travel spending.

Reality 3: It takes two to tangle – China and international community progress together

China to present a strong economic performance

Over the course of 2022, many have zeroed in on China's COVID-19 policies and criticized China for being isolated from the world.

But actually even before the COVID-19 policy change, China had maintained strong connections with the international community. According to China's General Administration of Customs, China's foreign trade value topped 40 trillion yuan (nearly $6 trillion) for the first time in 2022. Its total trade reached 42.07 trillion yuan, an increase of 7.7 percent year on year, topping the world for six consecutive years. Its trade with RCEP members expanded 7.9 percent year on year in the first eleven month of 2022. Foreign Direct Investment into the Chinese mainland expanded 9.9 percent during the same period.

And starting on December 30, 2022, market entities no longer need to provide foreign-trade operator registration materials in applying for import and export licenses in China. It is a major step forward in liberalizing trade and the business environment.

With the COVID-19 policy change, China is set to engage more closely with the international community in promoting economic recovery. China is the world's largest growth engine, contributing to 30 percent of global economic growth. According to JPMorgan's estimate, China's policy change could boost the Australian economy by 1 percent.

Chinese students, tourists and entrepreneurs will be out in the world, rebuilding the pipelines of communication and businesses that were disrupted by three years of the pandemic. Travel platform Ctrip saw searches for overseas destinations soared tenfold within half hour of the relaxation of the quarantine rules.

With international economic growth spurred by China's change in its COVID-19 policy and China's strengthening its domestic circulation, "optimistic" is the only word that can describe China's economic performance in the future. 2023 will see a vibrant China, bustling within and active abroad.

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