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China’s recovery: public investment, exports and consumption

China‘s recovery had as its first lever public investment and then exports and domestic consumption, according to the Central Bank of China and the World Bank.

Now that China’s economy is returning to normal, the intrinsic growth momentum is increasing and macroeconomic conditions are improving in China.

However, according to the Central Bank of China, it should also be taken into account that at the international level economic and financial conditions remain complicated and severe, uncertainties about the pandemic and the external environment persist and, at the national level, the bases. for economic recovery are not yet strong.

In particular, in 2020, export momentum was strong and the trade structure continued to improve.

During that year, imports and exports of goods grew 1.9% year-on-year to RMB 32.2 trillion.

Specifically, exports grew 4.0% year-on-year, with growth in November and December that accelerated to 14.9 and 10.9% respectively, while imports decreased 0.7 percent year-on-year.

China’s recovery

After expanding 2.3% in 2020, production in China has continued to recover, gradually shifting from public investment and exports to domestic consumption.

According to the World Bank, the policy has moved away from underpinning activity towards reducing risks to financial stability.

First, credit support and infrastructure spending, which initially drove much of the acceleration in investment, have moderated.

Furthermore, debt defaults, even for state-owned companies, have continued to rise.

The World Bank forecasts that China’s growth will rebound to 8.5% this year, reflecting the release of stifled demand.

This recovery in China represents an upward revision of 0.6 percentage points, largely due to expectations of higher external demand.

Amid declining fiscal and monetary support and tighter real estate and macroprudential regulations, growth is expected to moderate in 2022, to 5.4 percent.

 

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