China's economy achieved a notable growth rate of 5 percent last year, positioning the country as a major contributor to the global economy with an estimated 30 percent share of worldwide growth. This achievement comes despite facing a challenging domestic and international environment.
The cornerstone of China's economic success lies in its robust governance model, which is characterized by swift responses and the ability to adapt to changing economic landscapes. Faced with negative economic news in mid-last year, the Chinese government promptly introduced a series of critical stimulus measures. These included lowering lending rates and bank reserve ratios, as well as implementing a substantial fiscal package worth 10 trillion yuan ($1.38 trillion) aimed at addressing local government debt issues.
In addition to these initiatives, authorities unveiled a proactive fiscal policy coupled with a moderately accommodative monetary stance. These strategies are designed to enhance unconventional counter-cyclical adjustments and stimulate domestic demand. Looking ahead to 2025, the Ministry of Finance has announced plans to significantly increase the fiscal deficit and issue more government bonds, including super-long treasury bonds and special local government bonds, to sustain economic momentum.
However, the path forward is not without challenges. The Trump administration's imposition of an additional 10 percent tariff on all Chinese imports has created a more stringent export environment for China. While Chinese exporters have traditionally focused on emerging markets, maintaining the same level of demand in North America and Europe is proving increasingly difficult.
To sustain its growth target of approximately 5 percent this year, Beijing recognizes the necessity of implementing bold measures. These include enhancing support for the private sector, deregulating parts of the economy, and strengthening engagement with emerging markets. The private sector, which serves as the backbone of China's economic development, contributes over half of the nation's tax revenue, 60 percent of GDP, and employs roughly 80 percent of the workforce. Its role is crucial in further stimulating the economy.
In response to the evolving economic landscape, China is taking proactive steps to encourage the growth of private enterprises. On February 17, a special symposium was held to support private businesses, with Chinese President Xi Jinping attending and delivering a speech after hearing from representatives of these enterprises. This event underscored the government's commitment to fostering a conducive environment for the private sector to thrive.
Reference(s):
cgtn.com