China on way to exceed economic growth target in 2021

China is on its way to achieve economic growth well above its target this year with a controllable inflation level despite the threats posed by COVID-19 variants and supply constraints, say government officials and experts. Vice premier Liu He said the economy has continuously recovered this year and its full-year gross domestic product (GDP) growth is projected to exceed the expected target.

Indicators of growth, employment, prices and international payments have overall remained at a normal level since the beginning of the year, Liu said recently addressing the Hamburg Summit via a video link.

China’s annual economic growth target was set at above 6 per cent this year. Having grown by 9.8 per cent year on year in the first three quarters of the year, the world’s second-largest economy is expected to achieve about 8 per cent GDP growth for the whole year, experts were quoted as saying by an official Chinese English-language daily.

Kang Yong, chief economist at KPMG China, said the strong export growth had driven a continuous recovery in industrial production and manufacturing investment.

“Despite the emergence of the Omicron variant, we kept our forecasts of China’s GDP growth for this year and the next unchanged. It has been within expectation that new variants would appear as long as the coronavirus is yet to get controlled everywhere in the world,” Kang was quoted as saying.

Unless Omicron is proven to be significantly more contagious than the Delta variant, its economic impact should be smaller than the latter as vaccination rates have increased while the world has got more experienced in coping with the pandemic, Kang said.

“I don’t think the Chinese economy is facing stagflation,” Kang added, stating that consumer inflation has remained mild while the spike in industrial goods prices has started to soften with the recovering supply of electricity and commodities.

Looking ahead to next year, the vice premier said China will maintain the continuity, stability and sustainability of its macro policy, make more efforts to vitalize micro entities, and provide a better development environment for small and medium-sized enterprises and foreign businesses.

Hu Yifan, head of macroeconomics for Asia-Pacific with UBS Global Wealth Management, said Liu’s remarks signaled that the Chinese government may moderately ease macro policy in the coming year to avoid any sharp economic slowdown, but aggressive stimulus measures will be unlikely given the emphasis on policy stability.

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