China’s Central Economic Work Conference was held on 8-10 December 2021 in Beijing. The meeting was chaired by President Xi Jinping, who is also General Secretary of the Communist Party of China (CPC). It was attended by the top leadership of China, including all members of the Politburo Standing Committee of the CPC. The conference outlined China’s top economic policy priorities for 2022. In this context, the objective of the paper is to analyse challenges facing Chinese economy and its economic priority for the year 2022.
Prioritising Stability
The Central Conference highlighted ‘stability’ as a major policy priority for the year 2022 and noted that “actions should be taken to safeguard macroeconomic stability, keep major economic indicators within an appropriate range and maintain social stability.[i] Ning Jizhe, Deputy Head of the National Development and Reform Commission of China noted that the conference put ‘stable economic growth’ at its core.[ii]
The Central Conference termed year 2021 as a milestone for China and underscored its leading position in the world in economic development and controlling COVID pandemic. Further, it emphasised “the necessity to adhere to the centralised, unified leadership of the CPC Central Committee, promote high-quality development and pursue progress while ensuring stability”.[iii]This is in line with recent Party documents, including most recent speech by Xi Jinping delivered at Party School of the CPC Central Committee on 12 January 2022, which stressed on further strengthening unified leadership of the Party.
The Central Conference noted that (a) China will continue to carry out economic reforms, including regulating real estate, developing capital markets; (b) it will encourage high-tech development to achieve high-quality development; (c) strengthen support for Small and Medium Enterprises (SMEs); (d) improve productivity, efficiency and sustainability of economy and; (e) develop green economy and reform in energy sector.
Acknowledging Structural Problems
The Conference cautioned that “China's economic development is facing pressure from demand contraction, supply shocks and weakening expectations”.[iv] This is expected to pose challenges to China’s ‘dual circulation strategy’ that places greater emphasis on domestic production, distribution and consumption (internal circulation) supported by exports (external circulation).
Of late, the Chinese experts have emphasised that apart from COVID-19 pandemic, the country faces many risks, including the global supply chain disorder, the rising costs of raw materials and weak consumer demand.[v] These factors have negatively affected economic growth in China. The fact remains that China’s economic growth rate has slowed down in the past decade.
Table: China’s GDP Growth, 2013-2020
|
GDP Annual Growth |
GDP per capita growth (Annual %) |
2013 |
7.7 |
7.2 |
2014 |
7.4 |
6.8 |
2015 |
7.0 |
6.4 |
2016 |
6.8 |
6.2 |
2017 |
6.9 |
6.3 |
2018 |
6.7 |
6.2 |
2019 |
6.1 |
5.7 |
2020 |
2.3 |
2.0 |
Source: World Bank (2021)[vi]
The annual growth rate of merely 2 percent in year 2020 was primarily due to the pandemic. Hopeful of economic recovery from the pandemic, China had set a growth target of over 6 percent for the year 2021. However, latest Chinese government data suggest that its GDP expanded 8.1 percent in 2021.[vii] As per a report by the Chinese Academy of Social Sciences, Beijing, China’s GDP is likely to grow by 5.3 percent in the year 2022.[viii] However, the forecast may be revised depending on COVID situation.
Employment Situation
China’s official data show that the country had achieved annual target of employment by the end of November 2021. China’s urban unemployment rate was about 5 percent from January to October 2021. However, some Chinese experts believe that COVID-19 has affected the employment situation differently. Fresh college graduates are finding it difficult to get jobs. The unemployment rate among college graduates (of 16-24 age group), reached 16.2 percent in July 2021, and moderated at 14.2 percent in October 2021.[ix]
Chinese migrant workers are directly exposed to the shocks caused by the COVID-19 pandemic. Falling remittances adversely affect their families, who rely on remittances. A recent study by Chinese economists suggests that 70 percent of internal migrant workers lost part of their wage income during the pandemic lockdown period. Further, rural migrants working in small and medium enterprises were affected badly.[x]
The unemployment problem in China is complicated as many young migrant workers prefer to work in the services sector, rather than in the manufacturing industry despite the wages being lower in the services sector. According to official national data, monthly income of migrant workers in the services sector was about 25 percent less than manufacturing sector in 2020.[xi]Thus, the transition from the manufacturing to the services sector brings greater job insecurity and lower income for the workers.
Green Economy
The Central Conference placed importance on developing green economy for China. The year 2021 considered as ‘Year One’ for China to move toward carbon neutrality. Zhang Xiaoqiang, Executive Vice Chairman of the China Center for International Economic Exchanges (CCIEE) at the policy briefing meeting (following the Central Conference) stated that “China also has big plans to develop green economy and could start reforming the energy sector, as it has already promised to achieve carbon peak by 2030 and carbon neutrality by 2060”.[xii] This is important as Chinese experts have highlighted that structural problems such as high consumption and heavy pollution in China’s industrial structures, are yet to be resolved. Economic practices in past have caused serious damages to the environment in China.
In sum, China’s Central Economic Work Conference has highlighted its priority to achieve stable economic growth for the year 2022. The Conference has acknowledged that the Chinese economy faces a number of challenges and pressures both from demand and supply sides. Moreover, much will depend on the COVID situation in China, which has created many problems for the economy and population and exposed structural contradictions in the employment situation in China.
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*Dr.Sanjeev Kumar, Senior Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: Views expressed are personal.
End Notes:
[i]Xinhua, “China sets tone for 2022 economic development with clear-cut policy toolbox” Beijing, available at http://www.news.cn/english/2021-12/11/c_1310365072.htm(accessed on 10/01/2022)
[ii]“After the Central Economic Work Conference, China to roll out policies to ensure stability: officials”, Beijing, available at https://www.globaltimes.cn/page/202112/1241252.shtml(accessed on 10/01/2022)
[iii]Xinhua, “China sets tone for 2022 economic development with clear-cut policy toolbox” Beijing, available at http://www.news.cn/english/2021-12/11/c_1310365072.htm (accessed on 10/01/2022)
[iv]Ibid
[v]Yang Shanshan “Three takeaways from China's key conference for 2022 economic plan” Beijing, available at https://news.cgtn.com/news/2021-12-13/Three-takeaways-from-China-s-key-conference-for-2022-economic-plan-15X8XawYixq/index.html#:~:text=He%20said%20China%20could%20initiate,country's%20energy%20sector%20in%202050.(accessed on 12/01/2022)
[vi]World Bank data, available at https://data.worldbank.org/indicator/NY.GDP.PCAP.KN?end=2019&locations=CN&start=2013&view=chart,(accessed on15/12/2021).
[vii] Xinhua “China's GDP expands 8.1 pct in 2021” Beijing available at http://www.xinhuanet.com/english/20220117/f3d3b66d5e784650bee2865c4a625668/c.html (accessed on 21 January 2022)
[viii]“Chinese govt think tank proposes growth target of above 5% for 2022” London, available at https://www.reuters.com/markets/asia/chinas-economy-expected-grow-53-2022-says-govt-think-tank-2021-12-06/(accessed on 10/01/2022).
[ix]Cheng Jie, “Meeting the challenges of the economy”, Beijing, available at http://english.cssn.cn/opinion/202112/t20211220_5383857.shtml,(accessed on 10/01/2022).
[x]Yumei Zhang et al, “The Impacts of COVID-19 on Migrants, Remittances, and Poverty in China: A Microsimulation Analysis”,China & World Economy Vol. 29, No. 6, 2021 available at http://en.iwep.org.cn/selected_articles/202111/t20211115_5374708.shtml, (accessed on 10/01/2022).
[xi]Cheng Jie, “Meeting the challenges of the economy” Beijing, available at http://english.cssn.cn/opinion/202112/t20211220_5383857.shtml,(accessed on 12/01/2022).
[xii]Yang Shanshan “Three takeaways from China's key conference for 2022 economic plan”, Beijing, available at https://news.cgtn.com/news/2021-12-13/Three-takeaways-from-China-s-key-conference-for-2022-economic-plan-15X8XawYixq/index.html#:~:text=He%20said%20China%20could%20initiate,country's%20energy%20sector%20in%202050 (accessed on 13/01/2022)