Incremental policies energize China's economic growth as year-end approaches

Editor's note: Xie Huihua is a researcher at the School of Economics of Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN. 

Amidst global economic headwinds, China has been proactive in rolling out incremental policies aimed at bolstering domestic demand and investment, crucial for sustaining economic growth. Premier Li Qiang's recent remarks at the China International Import Expo resonated confidence in achieving this year's GDP targets and maintaining a positive economic outlook. This commentary examines the October economic data to assess how these policies might shape growth in the fourth quarter and the country's overall annual economic trajectory.

The suite of policies initiated in the third quarter represents a strategic pivot from a heavy reliance on investment to a more balanced emphasis on both investment and consumption, aiming to substantively expand domestic demand. The policies include enhancing macroeconomic policy efficiency, fueling domestic demand, providing enterprise support, stabilizing real estate, and revitalizing the capital market. These are not short-term fixes but are geared towards driving structural reforms.

Early indications of October's economic data revealed that the policies are gaining traction. The rebound of the manufacturing PMI to 50.1 indicates revitalization in production activities. The real estate market has shown signs of stabilization, with a notable increase in housing loans and a 3.9 percent year-over-year rise in new and second-hand home transactions, signaling a positive development after 8 months of decline. Furthermore, a 7.5 percent year-over-year increase in M2 money supply and a 1.40 trillion yuan ($194 billion) rise in social financing underscored a strengthened enterprise production willingness and investor risk appetite.

The expansion of domestic demand remains a focal point. October's stable consumer market, evidenced by a modest 0.3 percent increase in CPI, suggests a gradual consumption recovery. The government's policies that target equipment upgrades and the trade-in of consumer goods, are poised to unlock further consumer potential. 

In summary, the incremental policies have been instrumental in driving demand, investment, and production, key pillars for stable economic growth. As effects of these policies become more pronounced, it is expected that the economy will continue its upward trajectory in the fourth quarter, reinforcing the foundation for achieving the annual economic objectives. In the face of global challenges, China's robust macroeconomic management and structural economic enhancements have shown resilience, underscoring its capacity to navigate through complex economic landscapes.

(Cover via CFP)