China GDP likely to rise 7.5% in 2021

BEIJING: The Chinese economy is likely to witness normal growth next year, as the economic effect of the Covid-19 pandemic may diminish and the government will continuously to boost domestic demand, support innovative development and improve the business environment, experts said.

The BoC Research Institute, established by Bank of China Ltd, expects China’s GDP to grow by around 7.5% on a yearly basis in 2021, up from around 2.1% expected this year.

Looking ahead, infrastructure and real estate investment will maintain rapid growth, promoting continuous economic recovery.

It is estimated that fixed-asset investment will increase by 6.5% next year – especially infrastructure investment in key projects and fields, including transport, energy and water projects, as well as investment in “new infrastructure” projects, such as 5G, big data centres and artificial intelligence.

At the same time, investment in the manufacturing sector would continue to recover and its growth may turn positive next year, said a report released by the BoC Research Institute.

With new infrastructure supporting the operational framework of industrial Internet, China will usher in revolutionary innovations for the digital economy next year. Digital transformation will be widely used by various participants in economic activities.

Moreover, digital technologies would become the cornerstone of upgrades of the quality of life and also drive the strong growth in demand, said Cheng Shi, chief economist at ICBC International.

China’s plan for a new type of urbanisation will generate higher consumer demand from a larger section of residents. As the focus of consumption upgrade shifts to lower-tier cities and towns, the room for growth would hopefully increase for a greater number of cost-effective domestic brands, Cheng said in a research note on Nov 20.

Total retail sales of consumer goods, which have become an important driver of economic growth, are estimated to increase by around 10% in 2021, compared with a projected decline of 4.4% this year, said the report.

“According to our estimates, the average annual growth rate of China’s GDP will range from 5% to 6.1% over the next five years. In the future, fiscal policy will play an active role in boosting economic growth.

“The government will launch measures on a regular basis to ensure fiscal funds will directly benefit businesses and individuals, ” said Chen Weidong, director of the BoC Research Institute. Chen urged the government to focus on improving the local government bond issuance mechanism and optimising the corporate structure.

The research institute expects total social financing to rise by 12% on a yearly basis in 2021, down from a projected increase of 13.5% this year. — China Daily/ANN

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