China’s digital economy will exceed 50 trillion yuan ($7.15 trillion) for the first time in 2022. [Photo/VCG]
China’s better-than-expected recovery as electronic currencies play a key role
China’s economic recovery has been better than expected and with a strong digital economy, the possibility of electronic currency should be explored.
These were presented at the 6th China Economic Forum held in Washington on May 17, hosted by the Peterson Institute for International Economics (PIIE) and the China Finance 40 Forum (CF40), a financial and macroeconomic think tank. This is the forum’s main achievement.
Miao Yangliang, a CF40 member and chief strategist and executive director of research at China International Capital Corp., said China’s recovery was “probably stronger than expected,” with a growth target of 5-6% in 2023. said to be in
“The problem is that the recovery is a bit uneven and atypical,” Miao said.
After three years of the COVID-19 pandemic, he said there has been an opening up of services and a lot of latent demand, which is not typical of past recoveries. “It’s uneven in the sense that service is doing better than production.”
Miao said he expects “tremendous growth” in two areas. One is the new energy or energy transition sector, as shown by China’s export data.
The other is the digital economy, which has reached $70 trillion and is growing. Instead of ignoring old or traditional risk sectors, he said, we need to rely on “two legs.”
Gao Xiangwen, chief economist at Essence Securities, shared two key views on the role of the private sector in China’s economy, property market and fixed asset investment.
In the real estate market, he noted that cash flow pressure remains high for private developers, even as sales volumes are recovering. On the role of the private sector in fixed asset investment, he said the pressure was mainly focused on the service sector, education and health care.
incentive policy
“But overall in manufacturing, the role of the private sector is still very active and government policies are still encouraging or at least quite permissive,” Gao said.
The International Monetary Fund said in a February report that China’s economy was recovering and reforms were still needed.
Nicholas Rardy, PIIE’s non-resident senior fellow and vice chairman of the National Committee on U.S.-China Relations, said the plan includes expanding social security programs, closing the productivity gap between state-owned and private companies, and gradually increasing retirement benefits. proposed reforms including Aging people to age 65 and improving access to quality education.
“I think there is a lot of potential to boost China’s growth well beyond the reform scenario laid out by the IMF, but that would require a more aggressive reform programme,” Rardy said.
U.S.-China goods trade in 2022 hit a new record of $690.6 billion, according to data from the U.S. Bureau of Economic Analysis (BEA) released in February.
Chad Bown, a senior researcher at PIIE, said the trade war had hurt the manufacturing side, even though trade was brisk. Geopolitical events are causing an energy reorientation, which is not good news for services such as tourism, business travel and education.
“The only good news is agriculture,” Bow said. But he also said that even agricultural trade between the United States and China is a “complicated story” given factors such as global drought, food shortages and military conflicts that lead to soaring global commodity prices.
“It’s clear that the first thing we need to do is start talking to each other at the highest level on trade,” he said.
Scholars also discussed digital currencies, especially national central bank digital currencies.
He Dong, deputy director of the IMF’s Monetary and Capital Markets Department, said central bank digital currencies (CBDCs) promised to combine the properties of cash and deposits.
Huang Yiping, director of the Institute of Digital Finance at Peking University, said the People’s Bank of China started research and pilot projects for e-CNY, China’s CBDC, at a relatively early stage.
“And one of the most important motivations was to improve the efficiency and safety of domestic payments,” Huang said.
