Beyond the Noise: China’s Policy Reform and Economic Stability – OpEd

Amid the constant Western reports casting doubt on China’s economic status, a closer look reveals a different truth. At the Harvard Business Review’s 2024 annual conference held in Beijing, Yao Jingyuan, former Chief Economist of China’s National Bureau of Statistics, gave a sobering assessment: “ Although our economy is complex, it is only necessary to examine our agricultural and industrial production to see stability and stability. the power that sustains it.” His words are highlighted by the apparent success of 2024 – another bumper grain harvest and massive industrial growth, painting a strong picture of China’s manufacturing.

For all the outward talk of deflation and stagnation, the truth is more obvious. Estimates show that China’s grain harvest will reach 1.4 billion jin, or about 700 million tons – an increase of 100 billion jin compared to the annual average the last ten. This success is not just a statistic; it’s a testament to years of steady, fast production. In addition to stabilizing the economy, this success also strengthens food security. In these figures, China finds a quiet but clear opposition to the skeptics.

The importance of a sustainable food supply cannot be overstated, especially in a world that depends on Chinese manufacturing for many things. Instead of getting lost in the statistics, one only has to look at what is in the market: High production of meat, poultry, eggs and vegetables, as well as falling prices are a sign of a strong supply of agricultural products in China. Then there is manufacturing – the backbone of China’s industry – where growth is only there. Manufacturing increased by 7.5%, and high-tech production increased by 9.1% in the first three quarters of this year. The speed of high technology is increasing, and energy consumption per unit of added value in large industrial enterprises has decreased by 3.8% annually. China’s exports have also maintained momentum, increasing by 6.2% year-on-year, reflecting the strength of the well-established industrial environment. This export strength rests on three pillars: a complete supply chain, strong manufacturing capacity, and a private sector that accounts for 55% of the economy. As the year draws to a close, China’s import power will continue, keeping China firmly on the path of global competition, based on real world results.

However, despite the positive signs in China’s economy, there are major challenges. By the end of September, accounts receivable had risen to 25.72 billion yuan, accounting for nearly 30% of the operating income of selected enterprises and disrupting cash flow. At the same time, the stock level reached a high of 6.74 billion yuan, highlighting the worrying imbalance. In response, the government is launching measures aimed at boosting investment across the infrastructure, industry and goods sectors. Among these, industrial investment – especially the development of capital equipment – emerges as the most promising method, which shows a strategy of action to restore cash flow and save energy. of the economy. The National Development and Reform Commission reports that by 2023, China will invest about 4.9 billion yuan in infrastructure for key sectors such as industry and agriculture. Looking ahead, the government intends to boost this investment by 25% over the next four years, with a target of 7 billion yuan by 2027 – an annual increase of 350 billion yuan in investment. industrial innovation.

Recognizing the constraints caused by local government debt, the Chinese government is moving forward with fiscal measures to address these problems. On October 12, the Ministry of Finance unveiled a policy aimed at stabilizing growth, providing enhanced support to reduce domestic credit risks. This initiative includes the issuance of special government bonds to strengthen the core investment of large state banks and the use of financial instruments to strengthen the housing market. In another decisive step to strengthen economic stability, China’s central government has earmarked 700 billion yuan for investment in projects focused on national policies and capacity building in key sectors. In addition, the government has fully allocated 1 trillion yuan in long-term special treasury bonds to finance key projects and improve defense capabilities. This introduction of monetary policy is being done to maintain the rate, with expectations to issue more bonds until 2025.

The latest data from the National Bureau of Statistics reveals that China’s purchasing managers’ index (PMI) rose to 50.1% in October, which is a sign of a gradual recovery in the economy. This small increase, which is up 0.3 percent from last month, shows a steady trend in industrial production. In the real estate industry, the narrative has changed. Although the first nine months of the year saw a decline in investment and new home sales, positive signs emerged after the government promised to reverse the fall. October saw both new and used home sales increase by 3.9% year-on-year, marking the first improvement after eight months of decline. This recovery is most noticeable in the first-tier cities, where sales of newly built homes increased by 14.1%, and older homes rose by 47.3%. Together, these developments reflect China’s policy performance amid the challenges of strengthening key sectors of its economy. In dealing with the complexities of its economic future, China is serious; working to promote consumption is key. Central to this effort is the importance of increasing residents’ incomes, creating meaningful employment opportunities, and promoting wealth appreciation. Such measures are essential for expanding domestic demand and driving sustainable growth.

Strengthening consumer confidence, stabilizing and raising the market gradually is necessary. This not only shows a strong belief in China’s economic potential but also indicates a cooperative effort from all sectors of society to seize emerging opportunities for development. Looking ahead, there is clear optimism among policymakers that China will address its current challenges and raise public confidence and expectations. Historically, China has faced major setbacks – be it the dissolution of the Soviet Union in 1991, the Asian financial crisis of 1998, or the US subprime mortgage crisis of 2008. However today, the country is expected to show stability in the face of the situation. tumulus periods. A combination of strategic foresight and commitment to development will help China not only face these challenges. However, it all depends on innovation, and a forward-looking approach that harnesses the collective power of China’s economy.