Chinese Expert: "Second Half Growth Rate of Around 5% Would Be Favorable"

China's internal assessment has concluded that an economic growth rate of around 5% in the second half of this year would be considered a favorable outcome. While acknowledging that a rapid and steep recovery is virtually impossible, it also predicted that the economy would not sharply decline either.

On the 25th, Zhu Baoliang, Chief Economist at the National New Infrastructure Center (SIC), spoke at the Korea Institute for International Economic Policy (KIEP) Beijing Office's Korea-China Economic Forum held at the Marriott Hotel in Chaoyang District, Beijing, on the theme of "Recent Economic Conditions and 2023 Economic Outlook." SIC is a think tank under the National Development and Reform Commission (NDRC), the macroeconomic authority. Zhu forecasted, "The third quarter will see growth of about 4.5%, and the fourth quarter about 5.0%," adding, "Given the characteristics of the Chinese economy, it will show a stable trend."

Jubao Liang, Chief Economist at the State Information Center (SIC) (right), is attending and presenting at the Korea-China Economic Forum held by the Korea Institute for International Economic Policy (KIEP) Beijing Office on the theme of "Recent Economic Conditions and Economic Outlook for 2023" at the Marriott Hotel in Chaoyang District, Beijing, China. (Photo by Hyunjung Kim)

He identified the main factors delaying the current economic recovery as demand shortages due to lingering effects of COVID-19, corporate management difficulties (lack of confidence), expanding real estate credit risks, local government debt, and US-China relations issues. China's GDP growth rate in the second quarter was 6.3%, significantly below market expectations that had predicted over 7%.

Regarding corporate management difficulties, Zhu said, "There has been a social trend of negativity toward private enterprises and capitalists," diagnosing that "concerns about property rights protection and fairness among companies made it difficult for entrepreneurs to invest." He added, "Although recent government support measures for private sector development have been announced, similar plans have been proposed countless times since 2005," emphasizing, "We need to observe whether these support measures will have any real effect and whether they can gain the trust of private enterprises."

He also proposed relatively concrete measures to address issues such as expanding domestic demand and rising youth unemployment. Zhu stated, "To expand domestic demand, incomes must be increased," suggesting, "One method could be to provide retirement benefits to migrant workers (nongmingong) when they reach 60 years old." He stressed, "If China's economy maintains a growth rate between 4.5% and 5.0% next year, market expectations will improve due to two consecutive years of stable growth, and consumers will start spending money," adding, "This year and next are very important periods for the Chinese economy."

Regarding high youth unemployment, he explained, "There is actually no perfect solution for employment," but added, "Even if it is not formal employment, the government could consider providing subsidies for internships and similar positions," emphasizing, "It is also important to allow young people to build social experience first."

Zhu's presentation on this day did not reflect the policy directions from the Politburo meeting held on the 24th. On this, he said, "The actual economy lags about nine months after domestic monetary policy announcements, and fiscal policy effects also appear after about three months," emphasizing, "Also, just because a document is released at a Politburo meeting does not mean policies are immediately implemented." Regarding government monetary policy, he noted, "With inflation rates being minimal, the biggest concern is deflation," adding, "Considering various trends, the low-interest-rate stance is expected to continue this year and next."

This content was produced with the assistance of AI translation services.