While the 14th Five-Year plan envisages a massive overhaul of the country’s domestic market to boost consumption in order to reduce China’s reliance on shrinking exports markets, the Vision 2035 visualizes a long-term plan, reflecting the developmental vision of the President Xi Jinping..
Keeping in view these ground realities China pulled further ahead of other major economies in November as industrial output and retail sales strengthened, reinforcing expectations of healthy growth in 2021. Industrial production rose 7% in November from a year earlier, while retail sales expanded 5% in the period. Fixed-asset investment grew 2.6% in the first 11 months of the year from the same period in 2019. The data matched the median estimates in a Bloomberg survey of economists.
China’s control over the pandemic is widening its divergence with other major nations, many of which are now re-imposing virus restrictions amid new waves of cases. After an early reliance on state-led investment to spur the economy, the latest figures show China’s recovery has broadened out to consumers, with spending on goods like cosmetics and jewelry picking up strongly. Oxford upgraded its estimate for China’s 2021 growth to 8.1% from 7.8% based on recent data. Economists surveyed by Bloomberg predict growth will accelerate to 5.9% in the current quarter and reach 2% for the whole of 2020.
While the strong recovery has given the central bank reason to reassess its policy stance, it isn’t withdrawing support just yet amid a spate of corporate defaults that have roiled debt markets. The People’s Bank of China added liquidity on recently Tuesday to ease financing pressures, $145 billion of one-year cash via the medium-term lending facility, more than offsetting the amount maturing in December.
The solid activity reduces the need for the People’s Bank of China to cut interest rates in the near future, but it doesn’t mean the PBOC will be able to withdraw policy support quickly. We expect the central bank to take steps to smooth corporate funding as it begins the long process of policy normalization. China is benefiting from its status as manufacturer to the world. Exports have skyrocketed in recent months as new virus restrictions in many of China’s biggest markets fueled demand for medical equipment and work-from-home electronic devices.
Still, the recovery has some way to go. Retail growth remains below the 8%-plus pace reached last year, and for the first 11 months of 2020, sales were still down 4.8% year-on-year. Restaurants and catering declined 0.6% in November from a year ago, suggesting that consumers are still somewhat nervous about eating out. China`s President Xi Jinping and senior members of his team have signaled they’re considering further measures to boost household incomes and spending, with the ruling Communist Party’s Politburo, it’s top decision-making body, last week promising “demand-side reform.” Incomes may also get a boost from a tightening labor market, with Tuesday’s data showing the urban unemployment rate dropping slightly to 5.2% in November.
According to Fu Linghui, a spokesman for the National Bureau of Statistics projected “relatively fast” expansion in 2021 driven by consumption. Goldman Sachs Group Inc. also upgraded its growth forecasts based on Tuesday’s report, raising this year’s to 2.4% from 2% and next year’s to 8% from 7.5%. Fixed-asset investment growth slowed slightly in November from the previous month, but remained well above levels seen in recent years. Manufacturing investment grew 10.8% year-on-year in November, up sharply from October in a trend driven by export growth, Goldman Sachs analysts said in a report. Infrastructure investment growth moderated slightly, while property investment growth remained at high levels.
The data suggested that private sector sentiment is improving, with fixed asset investment by privately-owned companies up 0.2% in the 11 months through November, the first positive reading this year.
“The impressive export growth in 2020, by helping to boost the V-shaped recovery in the domestic economy since the second quarter of 2020, has for the past couple of months reduced the government’s need to ramp up infrastructure spending,” Nomura Holdings Inc. economists led by Lu Ting wrote in a note. “That said, we expect manufacturing investment growth to remain elevated in coming quarters.” The US and Europe have seen a massive rise in imports from a resurgent China, causing serious distortions in their economies and raising possible threats to their security. They now appear keen on getting out of a Chinese embrace, or becoming excessively dependent on China.
China is said to have accounted for more than half of all global AI investment over the last five years and in just the next three years alone Beijing expects a tenfold increase in the advancement of AI within a few years. “The hype around China’s investment in AI is definitely the highest in the world,” The huge AI investment is all part of what Beijing calls “Made in China 2025”
President Xi Jinping’s Government knows this. It sees AI as an economic game-changer, something that will “profoundly change human social life and the world”.
“By 2030, we shall make artificial intelligence theory, technology, and application at the world’s leading level,” the Chinese Government said in its top-level AI plan. “[China will] be the major artificial intelligence innovation Centre of the world.” AI in real life will directly be related to the Social media feeds, Smart phones, Voice recognition, Language translation, Facial recognition, Email filters, Defense systems like drones, Medical diagnoses, Fraud prevention in banking and Internet browsing.
China’s AI industry attracted 60 per cent of the world’s funding for AI between 2013 and 2018 and ranked first in the quantity and citation of research papers. Moreover, the world is yet to see the newly introduced technology and a wave of change by the Communist Party in China. Overall, China is on the road to a consistent growth in terms of a homogeneous society, strong and robust economy, increased use of technology in economic and infrastructure development both at micro and macro levels and more importantly political stability are the indicators of a highly progressive society as well as country.
Concluded
The writer is Secretary-General Pakistan-China Friendship Association Khyber his email is syeed.gilani@gmail.com
