Macro controls of national economy since 2012

2017-03-02
english.gov.cn

China has witnessed huge development in its national economy since 2012, as the average growth rate of China’s economy hit 7.2 percent, one of the highest among major economies around the world.

In the same period, average economic growth of developed countries and emerging economies reached 1.7 percent and 4.4 percent, respectively.

China’s economic structure also saw optimistic progress as 50.5 percent of gross domestic product (GDP) came from the service industry, which will continue to boom in the coming years.

Despite the tremendous development, international and domestic challenges remain, and China is carrying out economic macro controls to keep its economy growing at a reasonable speed.

Setting reasonable range of growth

In 2016, the government work report set GDP growth rate at 6.5 percent to 7 percent, a range that is in line with China’s current economic conditions.

In order to double GDP and income levels from 2010 to 2020, China’s economy should at least maintain a 6.5 percent growth.

A growth rate of 7 percent is still considered high, and will not release an over-stimulating signal to the economy.

Micro stimulation to cope with downward pressure

Strong stimulation will result in overcapacity and environmental pollution, dragging down economic development in the long run.

So when the economic growth rate fell to 7.4 percent in the first quarter of 2014, China applied micro stimulations to boost the economy, such as increasing investment in midwest railway construction, shantytown renovation, and tax cuts for small and micro businesses.

The moves proved effective, as the growth rate recovered to 7.5 percent.

Guidance for market expectations

Market expectations can be directed by information published by government departments, and in the internet era, such information will spread swiftly.

For example, in 2016, the central government’s warning about real estate bubbles and follow-up measures taken by the China Banking Regulatory Commission and other departments effectively guided market expectations and stabilized housing prices.

Macro-control policy system

China’s macro-control system includes financial, monetary, industrial and land policies.

Among the macro-control policies, financial and monetary policies are the main methods to direct economic development.

According to the 13th Five-Year Plan (2016-20), efforts will be made to improve the policy system with financial and monetary measures playing a major role.

Meanwhile, industrial, regional, investment, consumption, and pricing policies are also on the table.

Management of supply and demand

Supply-side structural reform can streamline the relationship between the government and market, reducing government’s improper intervention and raising the market’s role in resource allocation.

Supply-side structural reform can also break barriers in educational and medical markets, and effectively improve products and services that affect people’s lives.