S: Hi everyone. Welcome to CBN Friday Special, I’m Stephanie LI.
R: And I’m ZHANG Ran. In the first special episode of this year, we’ll be looking at China’s 2022 outlook.
S: The keyword for this year’s economy is, without any doubt, “stability.” China set out its overarching economic policies for 2022 in the annual Central Economic Work Conference in December, which stressed the importance of “stability” above all else, and that it would implement “a proactive fiscal policy and a prudent monetary policy.”
R: A “proactive fiscal policy” means providing more targeted and sustainable fiscal incentives and support, in particular for micro, small, and medium-sized enterprises. A “prudent monetary policy”, meanwhile, will be to maintain a “reasonable” level of liquidity but without “flooding” the market.
S: This tone-setting meeting also pointed out that China’s economy is facing “triple pressure” from demand contraction, supply shocks and weakening expectations, and the external environment is becoming increasingly complicated and uncertain. That’s why China has set “stability” as the key for this year’s economy.
R: China’s economy expanded at a moderate pace in the final month of the year, supported by better business sentiment, easing factory inflation pressures and faster car sales. However, the slumping property sector and slowing external demand are clouding the outlook for the world’s second-largest economy.
S: That’s right. There are mixed signals from some of the real-time economic data. Foreign trade strength continued in December, but the pace may slow due to shipping bottlenecks and the outlook for 2022 is less clear as it will be harder to sustain the record-breaking expansion of last year.
R: As factory-gate inflation showed some signs of easing last month, domestic demand is expected to improve. But home sales continued to fall, even as authorities try to prevent a hard hand on the sector. And the related construction demand has been weak and the government’s desire to curb pollution during the upcoming Winter Olympics will cloud this year’s production.
S: And the sporadic outbreaks of COVID-19 continue to take their toll. Although each successive outbreak has been contained, the recent outbreaks in Xi’an and Henan province have shown that the pandemic will continue to influence our lives in 2022.
R: Mainland China reported 116 domestic cases on Thursday, with 56 in Henan province, and 57 in Xi’an city of Shannxi. Xi’an has been under lockdown for more than two weeks, and Henan has stepped up efforts to epidemic control on Wednesday.
The zero COVID policy means that more lockdowns are highly likely. The uncertain nature combined with the relative regularity of the outbreaks will likely continue to impact consumer confidence, affect productivity, and inflate prices of key commodities.
S: COVID-19 is likely not the only cause of the economic slowdown, since domestic policy decisions have also had a part to play. Environmental policies targeting coal output and consumption that led to a power crunch in parts of China will continue to impact both housing and factories.
R: All of the above have contributed to a not-so-strong performance in the Chinese stock market. The A-share market wasn’t able to secure a “red opening”, as the major indexes have been in the “green” for four straight days since the beginning of this year.
S: Still, China’s economic outlook for the year is predicted to be relatively bright with GDP growth forecast at over 5 percent, which is higher than the global average.
However, the economic growth in 2022 is expected to slow from the 2021 rate. The International Monetary Fund (IMF) and the World Bank predicted a 5.6 percent and 5.4 percent year-over-year growth, respectively, which align with the 5.3 percent prediction made by the Chinese Academy of Sciences.
R: But when compared to the economic outlook of the rest of the world, China is still in a relatively strong position. Its success in containing the COVID-19 pandemic and stimulating productivity has allowed a relatively normal pace of work and life in the country.
S: In 2021, a wide range of industries was hit by unexpected regulations, from the education sector to internet platforms to the gaming industry. Going into 2022, it is likely we will see more regulations be released to further strengthen China’s growing regulatory regime for digital industries.
R: For the tech sector, the State Administration for Market Regulation (SAMR) has just fined tech giants including Tencent, Alibaba and Bilibili for violating the anti-monopoly law on Wednesday, which is a fresh sign of China’s continued efforts to crack down on monopolistic behaviors. China also established a new anti-monopoly bureau, meaning that the department will have more investigative powers going forward and more resources to implement regulations and punish market players for failing to comply.
S: Moreover, laws and regulations will be in place to beef up the protection of domestic data. China passed the Personal Information Protection Law last year, and the cybersecurity regulation which requires companies with more than a million users to undergo data security review before seeking foreign listings will be effective from February 15.
R: Despite the challenges presenting China’s economy, there are also reasons to remain positive about business in 2022. For one thing, The relatively stable economic situation that has benefited consumption and productivity among domestic companies is also a boon for foreign companies.
S: And the Regional Comprehensive Economic Partnership (RCEP) has come into effect on January 1st. The world’s biggest trading bloc covers a market of 2.2 billion people with a combined economic size of $26.2 trillion, or 30 percent of the world's GDP. It is expected to give a strong boost to economic integration in the Asia-Pacific region, promote post-epidemic recovery, and become a new engine for regional and global economic growth.
Executive Editor: Sonia YU
Editor: LI Yanxia
Host: Stephanie LI, ZHANG Ran
Writer: Stephanie LI, ZHANG Ran
Producer: XIANG Xiufang
Sound Editor: ZHANG Ran, Andy YUAN
Graphic Designer: ZHENG Wenjing, LIAO Wanni
Co-produced by 21st Century Business Herald Dept. of Overseas News & SFC Audio/Video Dept.
Presented by SFC
21世纪经济报道海外部 南财音视频部 联合制作