Recovery and Bright Prospects of China’s Economy

By H.E. Cong Peiwu, Chinese Ambassador to Canada

Recently, I have had the opportunity to engage with people from various sectors, including business people, in Canada. I have noticed their keen interest in China’s economic performance. While many of them hold rational views, there are also some misunderstandings and misinterpretations. I would like to take this opportunity to share my views on this matter.

The bright long-term prospects of China’s economic fundamentals remain unchanged.

The timeline shows that China’s economic recovery has gained momentum. In the first half of this year, China’s Gross Domestic Product (GDP) grew by 5.5 percent year on year, significantly surpassing the growth rates of the previous year and the first quarter of this year. From January to August, fixed-asset investment increased by 3.2 percent year on year, with investment in high-tech industries growing by an impressive 11.3 percent. The real estate market has shown signs of recovery with the implementation of policies such as “recognizing households with mortgage records but no local property ownership as first-time homebuyers.” Total retail sales of consumer goods grew by 7 percent year on year, with a 4.6-percent increase in August alone, up 2.1 percentage points from the previous month. China’s surveyed urban unemployment rate dropped to 5.2 percent in August. The Purchasing Managers’ Index (PMI) for China’s manufacturing sector continued to rise. I firmly believe that the strong resilience, tremendous potential, and great vitality of China’s economy remain unchanged, and China has all the necessary conditions and ability to achieve this year’s projected targets for economic and social development, continuing to provide a crucial impetus for stable global economic growth.

From an international perspective, China’s economic growth has significantly outpaced that of major developed economies, showcasing strong resilience. The recent OECD “Interim Economic Outlook” predicts global economic growth of only 3 percent in 2023, with inflation in the G20 economies hovering around 6 percent. Against the backdrop of a slowing global economy and persistent inflation pressures in many countries, China’s recovery is beneficial to global economic revival. According to the International Monetary Fund’s “World Economic Outlook”, China’s economy is expected to grow by 5.2 percent this year and contribute one-third of the global growth.

The idea of “China’s economic collapse” is groundless.

In the first eight months of this year, China’s imports and exports were roughly the same as in the same period last year, with an improved structure. Since the beginning of the year, prices have been at a low level. However, taking into account the price level, demand recovery, economic growth and money supply factors, it can be concluded that there is no so-called deflation in the Chinese economy, and deflation will not occur later on. In August, consumer spending continued to recover, with a continuous improvement in the relationship between demand and supply. During the period, consumer prices rose at a faster pace month on month and returned to positive territory on a yearly basis, while producer prices for industrial products returned to positive territory month on month, with a narrowing year-on-year decline. China’s price levels are likely to continue to improve and reach close to the annual average. Since mid-July, the Chinese yuan has remained stable and strengthened against a basket of currencies and has shown relative strength against non-U.S. currencies.

China’s economic development will continue to offer opportunities to the world.

From January to August, 33,000 new foreign-invested enterprises were established in China, a 33-percent increase year on year. FDI in high-tech manufacturing in actual use soared 19.7 percent, while that in high-tech services related to research and development (R&D) and design experienced a remarkable 57.1-percent growth. Investments from countries such as the United Kingdom, Canada, France, Switzerland, the Netherlands, and Germany in China maintained rapid growth, with Canadian investments in China growing by 111.2 percent.

Chinese modernization will offer new cooperation opportunities to countries worldwide, including Canada. From January to August, Canadian exports to China reached 19.4 billion Canadian dollars, up 17.3 percent year on year. This clearly demonstrates the potential of China-Canada economic and trade cooperation, and China’s economic development will continue to provide opportunities for Canadian businesses. In addition, I hope that Canada will meet China halfway, providing a fair, just, transparent, and non-discriminatory business environment for Chinese enterprises, so as to bring tangible benefits to the people of both countries through economic and trade cooperation.

HEADER IMAGE: Containers are unloaded from a ship at a port of Qingdao, East China’s Shandong province.