What’s new: China needs to pursue a strategy that combines expanding domestic demand and the deepening of supply-side structural reform to meet changing conditions at home and abroad, Vice Premier Liu He wrote in the Communist Party’s official newspaper on Friday.
The swathe of volatile circumstances abroad includes the Covid-19 pandemic, a sluggish global economic recovery, high inflation, and a less stable energy supply, the top economic policymaker wrote in a People’s Daily article.
Meanwhile, certain countries have “disregarded norms of international relations and economic and trade rules” and tried to place China’s economy under the most intense pressure possible through “decoupling” and attacks on Chinese companies, he added.
Domestically, China is facing triple pressures of shrinking demand, supply shocks, and weakening expectations, as well as challenges including waning advantages in labor and land, insufficient scientific innovative capacity and an aging population, he said.
To achieve high-quality development, the economy needs effective demand such as investment with a reasonable return and consumption supported by income, Liu wrote, adding that supply-side structural reform should focus on quality and efficiency.
Supply-side structural reform, a term that appears frequently in important policy documents, has been guiding the Chinese government’s economic work in recent years. It is intended to take into account the need to sustain both short-term growth and long-term momentum.
The vice premier also reiterated the need to foster the private sector while setting up the “dos and don’ts” for capital expansion.
The background: Liu’s remarks come as China’s economic recovery is plagued by weak domestic demand, a prolonged property market crisis and disruptive Covid-19 outbreaks.
Third-quarter GDP grew 3.9%, beating expectations, but official data also showed poor consumption and employment exacerbated by strict Covid curbs in the past few months. The economy is widely expected to miss the government’s 2022 growth target of around 5.5%.
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and Jonathan Breen (jonathanbreen@caixin.com)
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