“Weak domestic demand and slow global economic recovery are still challenges facing China’s rebound, so boosting consumption is essential to driving up our economy,” Yu Miaojie, President of Liaoning University, told Beijing Review, adding that risks like the supply crunch last year are waning. 

Yu is a deputy to the 14th National People’s Congress (NPC), China’s highest state organ of power. He is attending the First Session of the 14th NPC in Beijing, which opens on March 5 and will run until March 13. 

According to the Government Work Report delivered by Premier Li Keqiang at the opening meeting, China has set a GDP growth target of around 5 percent for 2023. “This suggests the government’s focus is on high-quality economic growth. I believe this target is achievable,” Yu said. Earlier this year, the International Monetary Fund raised its forecast for China’s economic growth in 2023 to 5.2 percent, up 0.8 percentage points from its projection in October last year. 

The government will prioritize the recovery and expansion of consumption, and improve the incomes of urban and rural residents, the report said.  

Yu suggested the government step up policies to support the real economy, narrow the urban-rural gap in infrastructure, and increase tax and fee cuts to expand domestic demand. He also said manufacturers should be encouraged to move up to the higher ends of industrial chains.  

“The government should boost the consumption of big-ticket items like cars and home appliances, advance the development of convenience stores in urban communities, improve logistics services in rural areas, and support the tourism industry as people’s desire to travel returns,” he said. 

Yu also called for greater support for private businesses, especially ensuring their access to production inputs at the same prices as state-owned enterprises. According to him, the government and financial institutions should improve support for private enterprises. “Some private firms still face difficulties in financing and land use. As long as their operation costs are cut, improving profits will facilitate their business expansion and therefore expand employment and boost consumption,” he said. 

According to Yu, China’s supply chains have weathered the challenges of the COVID-19 pandemic well, but logistics costs are still high and digital transformation and efficiency should be improved. The government should ramp up support  for enterprises to develop offline supply chains as well as digital platforms. He also said online procurement of materials through digital platforms will drive the upgrading of small and medium-sized enterprises. 

Yu further suggested promoting cooperation with foreign countries participating in the Belt and Road Initiative, improving China-Europe freight rail service network and advancing negotiations on a China-Japan-Republic of Korea (ROK) free trade area (FTA). “China and the other two countries have strong economic complementarity, which is conducive to cooperation between their enterprises. Northeast China, adjacent to Japan and the ROK, will play a key role in the FTA,” Yu said.  

The Regional Comprehensive Economic Partnership (RCEP), which entered force on January 1, 2022, provides driving forces for economic integration of member states, according to Yu. The RCEP consists of 10 Association of Southeast Asian Nations (ASEAN) countries, as well as China, Japan, the ROK, Australia and New Zealand. 

China’s foreign trade growth was sluggish from November 2022 to January this year, owing to COVID-19-induced supply disruptions. “But foreign trade remains a key driver of China’s economic growth this year. Total imports and exports are expected to reach nearly 50 trillion yuan ($7.2 trillion), with Belt and Road partners to account for approximately one third of the volume,” he said.  

The report said China will further attract and utilize foreign direct investment (FDI) and open up the modern services sector. “The opening up of fields including banking, insurance and securities is widening. The government needs to improve the business environment and shorten negative lists for foreign investment,” Yu said.  

“Some foreign-funded enterprises are moving out of China, but it is not becoming a trend. China remains attractive to many foreign enterprises and FDI is improving,” he said. 

Copyedited by G.P. Wilson