China concluded the year 2021 with strong economic growth and good future forecast. Gross Domestic Product (GDP) exhibited strong growth and economy grew by 8.1 percent.
It is remarkable on different accounts and in the context of challenges China was/is facing are: First of all, China had to fight the impacts of COVID-19, which sharply brought down GDP growth to 2.2 percent in 2020. Second, China had to face off and on spells of COVID-19 variants. China had to put restrictions on mobility and closed down cities to ensure COVID-19 free environment. China was extra conscious to control COVID-19 due to upcoming Winter Olympics in Beijing. China did not want to take any chance or risk at any cost. Third, China is fighting intense trade war with US, which is also supported by some allies of US. Trade war has stressed the relations and industrial sectors of both countries. US is also running a smear campaign against Chinese companies to undermine Chinese efforts to invest at global level. Fourth, China was facing triple pressure including shrinking demand, supply shock and weak expectations.
Despite all these bottlenecks and stumbling blocks, China refused to bow down. China scored unprecedented success of its economic history. First, it registered extraordinary growth in export and trade surplus. The export registered an overall growth rate of 29.9 percent, which is incredible in the present context. Exceptional performance of export led to highest-ever trade surplus since 1950. China secured $ 676.4 billion as trade surplus in 2021. Surplus highlights that China’s manufacturing and industrial base is strong enough and has the ability to absorb the sudden shocks like COVID-19.
Further, manufacturing and industrial base has sound fundamentals, which can help China offset the negative impacts of trade wars or uncalled restrictions on the country.
The performance of manufacturing and industrial sectors helped offset the negative impacts of slump in the domestic demand and poor performance of real estate sector. Domestic demand could not perform according to perceived objectives or goals due to different reasons.
First, COVID-19 variants kept on coming back. China had to impose off and on restrictions on mobility, services sector etc. The restrictions immensely contributed in lowering the demand. The situation further complicated due to negative impact of COVID-19 on the income of people. Owing to lower income and pandemic people compromised on certain services like entertainment, hotelling etc, which negatively impacted income of people attached to these sectors. It further lowered the demand.
The situation started to improve in 2021. A decent upward movement was observed in the income of some sectors like catering, manufacturing along others. However, uncertainty due to COVID-19 and its variants has restricted the people to spend more. Better performance of business sector is a good omen for the consumption, as it will strengthen the expectations and lower the uncertainty. Although, there are signs of improvement in the form of improved income, but it will take some time to recover fully to pre-pandemic levels. It is expected that after the Winter Olympics the situation will start to recover with full swing. As anticipated that after the Olympics China may adopt less stringent measures. People are also trying to adjust to the new normal and revive their income sources.
The second biggest achievement of China in 2021 was in the form of tremendous performance of shipping industry. The data shows that shipping companies of China transported goods worth $3.36 trillion. It is a record for China. It turned the China number one in the world in the shipping business. It is expected that this trend will continue and get further improved in coming years. The reason of assumption is that China is investing heavily on its transportation network under the plan of Three-Dimensional Transport Network. The implementation of plan will revolutionise the supply chain and related business. Under the plan, China is aiming to achieve goal of 123 circle. It means China will make sure that goods are being transported within one day in the domestic market. The targeted time to deliver goods in neighbouring countries has been fixed at two days. China will also strive to deliver goods at the selected destinations in the world within three days. With the completion of this plan, China will further consolidate its position in global supply chain and no doubt shipping companies will also be one of the beneficiaries. The performance of China in these areas indicates new dynamics and realities in global economic, supply chain and manufacturing sector.
First, China is fast moving towards achieving the status of manufacturing superpower. Some experts believe China has already achieved the status of superpower, but China denies it. China is considering that still it has to cover some distance to achieve the status.
But it is good sign that manufacturing sector is exhibiting tremendous progress. It is an encouraging sign for the top leadership as; they have already made it one of the goals under the medium-term Vision of 2035.
Second, performance of shipping companies has strengthened the belief among the Chinese leadership and the people. It has been taken as a sign of trust on Chinese companies, especially in the context of COVID-19. It shows that world business community believes Chinese companies are safe and trustworthy. They can deliver efficient and reliable services even in the most difficult times.
Third, the world cannot decouple from China. Irrespective of trade war with US, China’s export continued to grow ($755.6 billion) and recorded a growth rate of 28.7 percent. Indian case is even more interesting. We know China and India are engaged at the border. India is also one of the leaders running smear campaigns against China and dreaming to be powerhouse of Asia. Despite these facts, India could not afford to decouple from China. Trade with China reached at highest level of Indian history with the figure of $125.6 billion (Indian import is $97.5 billion and export $28.1 billion). Owing to these factors, China believes that it can face any type of challenges in economic field with confidence and from the point of strength.
Fourth, Chinese companies have become strong enough to absorb sudden shock and uncalled trade wars or smear campaigns. It is hoped that it will contribute in enhancing trust of world business community on China. Moreover, countries will start to look at China as a trustworthy and capable partner for economic growth and development. Thus, China will be able to foster its cooperation under the initiatives like Belt and Road Initiative, Shanghai Import Expo etc.
In conclusion, it can be inferred that the success in economic fields will give confidence to China that it is moving on the right path to achieve the goals of China Dream, National Rejuvenation and fully developed country in all aspects. This confidence will push China to work harder to move on the ladder of growth and development to achieve the perceived goals. However, China will have to be mindful and aware of challenges and its weaknesses to achieve the goals. Awareness will help correct course of actions without compromising on the goals.
