Economic revival 'complicated' due to growing global competition: Xi

This is the slowest growth of China's economy since the 2.3 per cent registered in GDP in 1974

Efforts to revive China’s economy have become “complicated” with growing global competition to attract investment, President Xi Jinping has said, calling for steps to forestall and defuse major economic and financial risks, including those arising from the property sector and the piling local government debt.

In an article published in the official media on the subject “State of the Country’s Economy”, Xi said that more efforts should be made to attract and utilise foreign investment.

In a tacit admission of the disquieting state of the world’s second-largest economy which last year shrank to three per cent registering its second lowest growth rate in 50 years, Xi said that economic work in 2023 is complicated and the efforts to revive it should focus on the major problems and start with improving public expectations and boosting confidence in development.

In the article Xi noted that international competition for attracting investment is becoming more intense.

China, regarded as the factory of the world for decades, faced an increasing shift of international investments to several countries, including India, in the last few years due to three years of zero Covid policy as well as the government crackdown on big tech industries.

Last year the annual Gross Domestic Product (GDP) of China totalled $17.94 trillion in 2022, falling below the 5.5 per cent official target.

This is the slowest growth of the country’s economy since the 2.3 per cent registered in GDP in 1974.

Last year, China’s GDP declined from $18 trillion in 2021 to $17.94 trillion last year mainly due to a sharp rise of the dollar against RMB (the Chinese currency) in 2022.

In his article, Xi noted that international competition for attracting investment is becoming more intense and urged more efforts to attract and utilise foreign capital.

Efforts should be made to expand market access, comprehensively improve the business environment, and provide targeted services to foreign-funded enterprises, he said.

He called for efforts to effectively forestall and defuse major economic and financial risks, including the systemic risks arising from the property sector, financial risks and local government debt risks. According to 2019 estimates, China’s local governments’ debt rose to $2.58 trillion, which remained a constant worry for the government.

Xi said that there is still a lot of important work to be done in 2023 citing tasks such as advancing rural revitalisation on all fronts and planning a new round of reform across the board.