With global stock markets ending last year in turmoil, the economic outlook for 2019 remains uncertain.
But for China, this year is one of the final steppingstones to becoming a “moderately prosperous society” by 2020 in time for the 100th anniversary of the founding of the Communist Party of China the following year.
The challenge for the global economy, however, is to avoid a recession. There are fears that the often weak but nonetheless sustained recovery from the depths of the 2008 global financial crisis has now run its course and a correction is inevitable.
There are a number of risks on the horizon, not least trade tensions between the United States and China, which have yet to be resolved.
There are also concerns about Europe, with the possibility of the United Kingdom leaving the European Union in March without agreeing to an exit deal, and fears that Italian banks will create a systemic crisis for the euro.
On a more positive note, this year marks the 70th anniversary of the founding of the People’s Republic of China, and the country will host the second Belt & Road Forum for International Cooperation in April.
At this event, the Belt & Road Initiative, which has huge potential to drive economic growth, will take greater shape.
The government made its economic agenda clear at the Central Economic Work Conference, attended by the country’s leaders in Beijing in December.
The agenda includes tax cuts as part of a more proactive fiscal policy; boosting advanced manufacturing; tackling so-called zombie enterprises; raising domestic consumption; rural revitalisation; capital market reform; fostering a healthy property market; further opening-up the economy and allowing greater market access to foreign companies.
Great attention will continue to be paid to China’s growth performance this year. Growth was 6.5 percent in the third quarter of last year, in line with the target set in the Government Work Report in March.
It needs to average about 6.3 percent this year and next to meet the target of doubling 2010 GDP by the end of 2020.
Song Yu, chief China economist at Goldman Sachs in Beijing, said the government will want to carefully manage the economy to meet this target.
“This will be of critical importance this year. The government will not tolerate a sharp slowdown in the economy, although there might be some flexibility for a growth target of less than 6.5 percent,” he said.
“One of the priorities also will be maintaining employment stability, especially making sure college graduates, migrant workers and former members of the armed forces get jobs.”
Edward Tse, founder and chairman of Gao Feng Advisory, a management consultancy, said stability will be key for the government.
“The economy may slow a bit, but not a whole lot. The government has a number of levers it can pull to ensure stability,” he said.
“Part of the problem for China is that it is entwined in the global economy and at the centre of global supply chains that might be affected by increased trade protectionism.”
Xiong Yuan, chief analyst at Guosheng Securities, a research company, also believes achieving overall stability will be the government’s main aim, with growth of more than 6.2 percent likely.
“China’s economy will face a number of challenges, particularly from external factors, so stability will be the main priority,” he said.