China’s focus on leveling-up wins applause

Driving domestic consumption can aid global revival, foreign experts say

Photo taken on Aug 15, 2021 shows a view of the Ningbo-Zhoushan Port in Ningbo, East China's Zhejiang province. (PHOTO / XINHUA)

International experts have applauded China's focus on domestic consumption this year to stimulate the economy, especially coming at a time of uncertainty surrounding global economic growth due to rising geopolitical tensions.

At last month's annual Central Economic Work Conference in Beijing, China's leadership agreed to make economic stability a top priority and pursue steady progress.

The meeting heard that the country will aim to boost domestic demand in 2023 by focusing on the recovery and expansion of consumption, and by increasing urban and rural incomes through multiple channels.

"This particular work conference was all the more crucial as it came immediately after the consolidation of the country's key leadership and as leaders steer the country into the new phase of economic development in the post-pandemic era," said Lawrence Loh, director of the National University of Singapore's Centre for Governance and Sustainability. "The conference also spelled out clear directions for China amid the geopolitical tensions that are affecting the economic performance of many countries."

He said, in the global era, a domestic economy must work hand in hand with the world economy.

"It's good that the new economic plan emphasizes boosting domestic consumption and enhancing personal incomes and private capital," Loh said. "With uncertainty in the global economic arena, domestic consumption may well be the principal lever to lift the Chinese economy in 2023 and beyond."

Christopher Bovis, a professor of international business law at the University of Hull, in the United Kingdom, said the conference was imperative for China's economic development because it set the development parameters and policy priorities for the years ahead.

"For the first time, the outside world sees that the domestic agenda has been given preference and domestic consumption, with all its supply chains, is expected to be the driver for recovery," he said.

"China will focus on domestic markets … to shore up spending and set a post-pandemic recovery path. National infrastructure projects will receive priority, and this will see facilities for national services across China catch up over the coming decades," Bovis added.

During the conference, Chinese leaders stressed that China will make greater efforts to attract and utilize foreign capital, widen market access, promote the opening-up of modern service industries, and grant foreign-funded enterprises the same treatment as domestic entities.

China will actively seek to join high-standard economic and trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, leaders said.

"China's internationalization strategy has traditionally relied on outward investment and attracting investment to allow export industries to gain competitive advantages," Bovis said. "For the first time, we see the annual work conference focusing on inward investment as a vehicle to attract capital to allow domestic economic growth for critical infrastructure and domestic consumption benefit."

The meeting also highlighted that industrial policies should be optimized to facilitate the transformation and upgrading of traditional industries and the cultivation of strategic emerging industries, as well as shore up weak links in industrial chains and forge new competitive advantages in the country's pursuit of carbon peaking and neutrality goals.

Sustainability underlined

"The economic directions that were spelled out, especially to upgrade traditional industries, clearly reflect the underlying policy foundation for sustainability and to tackle climate change," Loh said.

"It's heartening that there is acute and explicit attention on the pursuit of carbon peaking and neutrality goals," he added. "Achieving new competitive advantages through sustainability is surely the way forward for the Chinese economy."

Chris Rudd, deputy vice-chancellor and head of the Singapore campus of Australia's James Cook University, said: "Investing in clean and green technologies is an obvious win-win approach both to economic stimulus and climate change mitigation. Not only does it provide for future environmental improvements with consequent savings on healthcare costs or restoration of infrastructure, it also builds a new and sustainable economy with very significant export potential."

The Chinese government announced at the end of December that it would scrap quarantine rules for inbound travel starting Jan 8, a major move toward easing restrictions on its borders and welcoming businesses.

Loh said the new rules represented a watershed for China's economic direction. "It's more than a signal," he said. "It's a firm step to steer the country and the economy toward the next era of growth and achievement in 2023."

Rudd said the adjustment of the Chinese economy after three years of COVID-19 restrictions has profound importance not only domestically but also internationally.

"On the domestic front, it signals a shift to a more sustainable pattern of investment and consumption, with an emphasis on infrastructure and a fresh drive on leveling-up. Internationally it seeks to counter the anticipated recessions in the US and Europe while offering a stimulus to exporting economies in ASEAN and Oceania," he added.