US expert upbeat as consumption expected to resume after pandemic

This could be a year of robust growth for China's economy, according to an economic and trade expert in Washington.

Sourabh Gupta, a senior fellow at the Institute for China-America Studies, told China Daily ahead of the two sessions that after three years of COVID-19 pandemic controls, the goal for China this year is above-average economic growth.

The two sessions introduce the coming year's plans for policies in areas including the economy, military, trade, diplomacy and the environment.

"I'm expecting growth somewhere in the range at or above 6 percent minimum. And that's a good enough number. But I think China should really strive for a 7 or 8 percent target, if that's possible," Gupta said.

Because people will begin spending again after the pandemic, he believes the main area of growth will be consumption.

"It's the government's role to support consumption in the economy and support economic growth without exacerbating existing legacy imbalances," he said, noting that the central government has decided to support the property sector, address some of the balance sheet deficiencies of local governments and, most significantly, "go ahead with the new round of structural reform and opening-up".

All of that, Gupta said, is intended to create "a virtuous cycle of growth", which is "going to be the priority focus this year".

He also sees social spending as a priority, but one that is much longer-term.

"Things like the common prosperity campaign, it's a longer-term campaign, and this is really not the year for a great amount of spending on social protection. It's more about really getting the animal spirit in the economy moving, and moving forward at a very fast pace," he said.

Expressing his confidence in the Chinese economy, Gupta foresees no economic recession for China any time in the near future and said that 2022 had been a difficult year largely due to the transmissibility of the Omicron variant.

"There had to be so many more clampdowns, and that really hurt consumption. But despite that, the Chinese economy grew much faster than the US economy," Gupta said.

On Jan 17, China's National Bureau of Statistics released a report showing that GDP grew by 3 percent over the previous year. Nine days later, the United States Commerce Department revealed that US GDP grew by 2.1 percent during the same period.

Gupta suggested that China look at its growth both from a short- and medium-term perspective, adding that the government needs to support consumption without exacerbating imbalances.

He specified that from a short-term perspective, as the two sessions examine economic issues through a 12-month window, the government should intervene in the property sector without conditioning developers to believe that they can expect a bailout whenever they encounter leverage and debt issues.

Similarly, the central government should support local governments, but this should be done within the necessary fiscal envelope so that China can keep a tight ship fiscally.

"But also, one mustn't lose focus of the medium- and longer-term. And that means continuing with structural reform, particularly reform and opening-up internationally, and that's very important if China does want to transition to a more advanced, higher-productivity growth model," Gupta said.

"From a medium-term perspective, it's very, very important that China move to a more consumption-centered economy," he added, with "the government itself moving from being a player on the production side of the economy to being a player on the consumption side of the economy".

"And in this regard, it is important that the government engage in far greater spending in terms of social protections over the medium term."