BEIJING: A Chinese official has dismissed concerns about the withdrawal of foreign capital from China, stressing that the country has multiple favorable conditions to attract foreign investment.
The official of the Office of the Central Committee for Financial and Economic Affairs said there are enormous opportunities for global businesses in the country’s super-large market, complete industrial system, and new development pattern.
China’s per capita GDP has exceeded $12,000 and its middle-income group has surpassed 400 million people, forming a vast domestic market with huge potential, the official said. China is the only country that has all the industrial categories listed by the United Nations and its industrial advantages are unmatched by other countries, according to the official.
The remarks came as the country held its annual Central Economic Work Conference days ago to decide priorities for the economic work in 2024. The Chinese leadership pledged to expand high-standard opening up at the conference.
Responding to media reports on China’s foreign direct investment, the official said despite a slip in the first ten months, the investment volume remains at a high level and foreign funds going to services and high-tech manufacturing have registered more rapid growth.
The official attributed the recent volatility in investment data to a drastically changing external environment with rising geopolitical risks, misunderstanding of China’s real conditions due to pandemic-disrupted communications, and the normal transfer of some labor-intensive industries amid shifting comparative advantages.
Looking ahead, China will steadily promote institutional opening up, cancel all foreign investment restrictions in the manufacturing sector, expand opening up in telecommunication and medical services, and resolve issues such as cross-border data flow and equal participation in government procurement, according to the official.
Efforts will also be made to make it easier for foreigners to do business, study and travel in China, the official said.
Chinese economy faces more opportunities than challenges in 2024, official says
The Ministry of Finance has allocated the first batch of 237.9 billion yuan ($33.38 billion) of proceeds from a sovereign bond issuance to areas such as post-disaster recovery and reconstruction, high-standard farmland construction and meteorological infrastructure construction, China Central Television (CCTV) reported on Monday.
As part of the 1 trillion yuan special-purpose treasury bonds, the first batch of funds will support more than 2,900 projects, CCTV reported, including 107.5 billion yuan to help with rebuilding and disaster prevention and mitigation.
The first batch of funds will be used directly in infrastructure construction and livelihood programs under a previous plan, which is a move to implement priorities mentioned at the just-concluded Central Economic Work Conference to stabilize social expectations, Hu Qimu, a deputy secretary-general of the digital-real economies integration Forum 50, told the Global Times on Monday.
“In the final sprint for economic growth this year and laying a foundation for next year, the allocation of these funds to the infrastructure sector will help reduce local government debt risks and contribute to a stable economic recovery,” said Hu.
The economy faces more opportunities and favorable conditions than challenges in 2024, with more macro-policies to be rolled out next year to bolster the recovery, said an official from the Office of the Central Financial and Economic Affairs Commission of the Communist Party of China Central Committee, the Xinhua News Agency reported, in a detailed interpretation of the just-concluded Central Economic Work Conference.
There are sufficient policy tools to use next year, as low consumer prices and low central government debt levels provide room for accelerating monetary and fiscal stimulus, the official said.
“Efforts will be made to boost the consumption shift from a post-COVID-19 recovery to sustained growth,” the official said, calling for further efforts to coordinate domestic demand and improve supply so as to fully leverage China’s ultra-large market advantages.
GDP growth is likely to reach 5.2 percent this year, which will lay a solid foundation for the country’s economic performance next year, Chen Fengying, an economist and former director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, told the media on Monday.
“On the one hand, policymakers have recognized the difficulties and challenges facing the economy and announced an array of targeted policies. The policies will continue to produce effects in 2024. On the other hand, the country has made notable progress in sci-tech innovation – represented by the release of Huawei’s Mate 60 smartphones – making the US realize that it can’t contain China anymore,” Chen said.
Multiple international institutions have upgraded their forecasts for the Chinese economy, with the Organisation for Economic Co-operation and Development projecting the Chinese economy will grow by 5.2 percent in 2023 and the IMF saying it will expand by 5.4 percent this year.
Given the sound fundamentals of the Chinese economy, China’s consumption sector will continue to see sustained growth in 2024, Chen said, calling for stepped-up policies to stabilize the real estate market and deal with local government debt risks.
The private economy is a major force in creating jobs. Only by sparking the vitality of the private sector can we expand employment, increase incomes and boost effective demand, Deng Haiqing, chief economist of AVIC Fund Management Co, told the Global Times on Monday.
The official from the Office of the Central Financial and Economic Affairs Commission pledged efforts to boost the development of the private sector with measures including improving the legal system and introducing more reforms related to market entry to protect the interests and rights of private enterprises.
As the US Federal Reserve recently sent signals of an end of interest rate hikes, the external pressure on the Chinese economy has eased. China’s fiscal and monetary policies will better focus on the domestic situation to promote high-quality development, Deng said.
According to the Central Economic Work Conference, proactive fiscal policies should be appropriately strengthened and their effectiveness improved, while prudent monetary policies should be flexible, moderate, precise and effective.
Deng forecast that the Chinese economy will likely grow about 5 percent in 2024, with employment and incomes to post further improvement.
Due to a narrowing divergence between the Chinese and US monetary policies and the rapid recovery of the Chinese economy, it’s expected that the yuan’s exchange rate will return to the pre-pandemic level of about 6.5 yuan per US dollar in the short and medium term, Deng said.
