Adviser underlines potential in structural drivers of growth

A truck loads containers at Tangshan Port, North China's Hebei province, April 16, 2021. [Photo/Xinhua]

There is a lot of potential in the structural drivers of China's growth, so the country is likely to see its GDP growth moderate in the first quarter, and accelerate in the second and third quarters when the previous macroeconomic policies take effect, a political adviser said on Tuesday.

But growth may moderate again in the fourth quarter. And, the perceived low market demand for credit is likely to prove temporary, said Liu Shijin, deputy director of the Economic Affairs Committee of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.

Liu fielded media queries on the sidelines of the annual sitting of the CPPCC National Committee in Beijing, and said in response that sustained efforts are necessary to harness the potential in the structural drivers of China's growth and to achieve a GDP growth around 5.5 percent this year.

Urbanization and digital economy are expected to generate new room for growth in the next 10 to 15 years, Liu said.

China's GDP expanded 8.1 percent in 2021, grew 4 percent year-on-year in the fourth quarter.

"Since late last year, strong macroeconomic policies have been rolled out to stimulate growth and monetary policy adjustments have shown notable signs of easing," he said.

"We believe it'll take some time for these measures to create a discernible effect on the market. Demand for credit is likely to pick up again from the second quarter."

In December, the People's Bank of China, the central bank, cut the reserve requirement ratio－the proportion of deposits that lenders must hold as reserves－by 50 basis points to a weighted average of 8.4 percent.

"Since the second half of last year, the economy has trended downward. So, adjustments to both monetary and fiscal policies are needed to underpin growth, first to stabilize it and then to step it up," he said.

"Yet, more importantly, the potential of structural drivers of growth must be unleashed for high-quality and sustainable development."

Liu also said more metropolitan areas need to be developed around existing major cities to enable industrial interactions, especially among manufacturing industries in cities and their neighboring townships.

In addition, measures that can enlarge the middle-income group and narrow the income gaps between various strata of society will stoke high-quality development and lead to common prosperity in the coming 10 to 15 years, he said.

Specifically, efforts should be made to more than double the country's middle-income group from the current 400 million to about 900 million during the period, he said.