Economic Watch: China’s economy to keep recovering with proactive fiscal policy
2021-01-08 13:06:08 Xinhuanet.com
The epidemic-induced lockdowns loomed over China’s economy in the first half of 2020, but with quick emergency response and government-aided stimulus package, its economy roared back.
The epidemic-induced lockdowns loomed over China's economy in the first half of 2020, but with quick emergency response and government-aided stimulus package, the country's economy roared back.
Massive tax cuts and increased government spending have helped the economy recover faster. The market is also closely watching over the country's fiscal policy in 2021: Would the country withdraw its financial support straight away? And how strong would its economic recovery be?
The country's annual key meeting on economic work has boosted market confidence. China would keep its macroeconomic policies consistent next year by not making any "sudden turns" as the foundation of its economic recovery is "not yet solid." That means the government will stick to its proactive fiscal policy in 2021.
OPTIMIZED FISCAL SPENDING
The World Bank (WB) pointed out in its latest report on China's economy that the country's gross domestic product is expected to grow 2 percent in 2020 and further rebound to 7.9 percent in 2021.
The bank has attributed the "faster than expected" recovery of economic activities to China's effective epidemic-control strategy, strong policy support and resilient exports.
According to China's tax authorities, tax and fee cuts in the first 11 months of 2020 totaled 2.37 trillion yuan (about 363.22 billion U.S. dollars), out of which 1.64 trillion yuan was saved under the preferential tax and fee measures unveiled in 2020 to bolster economic development and COVID-19 containment.
Besides, buoyant fiscal spending was seen in social welfare, health care and education sectors.
In the first 11 months of 2020, the country's fiscal expenditure grew by 0.7 percent from a year earlier to over 20.78 trillion yuan, with positive year-on-year growth seen in social security and employment, education, as well as hygiene and health sectors.
Considering the sound economic recovery, analysts expect that the focus of fiscal spending would shift from epidemic prevention to infrastructure construction.