It is predicted that the Chinese government will make all-out efforts to boost the economy with a goal of more than 5% of GDP growth next year. It seems to be willing to switch to a “pro-business” by suggesting active support for big tech companies that have put all-out pressure on them for more than two years. It is seen as a sign that he will focus on boosting the economy, surprised by the economic downturn caused by the prolonged “Zero COVID.”
Bloomberg predicted on the 18th (local time) that Chinese government will take a strong GDP growth stance, saying, “It seems that China is aiming for a growth rate of more than 5 percent.”
Earlier, the leadership, including President Xi Jinping, held a two-day Central Economic Work Meeting from the 15th to determine the direction of next year’s economic policy. At the meeting, it hinted that it would encourage the growth of private companies and provide additional support for the real estate market.
Above all, it means a lot that the Chinese government sent a strong signal about big tech support through this meeting. China’s leadership has pledged to support the private economy and protect the property rights and interests of private companies, according to a statement from a meeting reported by the state-run Xinhua News Agency. In fact, it foresaw a change in the stance over the past two years, which has been carrying out massive crackdowns and regulations on big tech.
Government officials also said they will support Big Tech to play a leading role in economic development, job creation and international competition. This is interpreted as the leadership’s willingness to do its best to achieve growth goals while acknowledging Big Tech’s role in reviving the economy.
Earlier in October 2020, after Alibaba founder Ma Yun publicly criticized the authorities, China launched a strong crackdown on the private sector, focusing on the big tech sector. The 2020 Central Economic Work Conference pledged to prevent the disorderly expansion of capital.
Adam Wolf, economist at Absolut Strategic Research, said, “The biggest change this year is focused on improving the business environment of Internet companies,” adding, “This can help restore market confidence and boost investment.”
The Chinese leadership also expressed its active position in fiscal and monetary policies. The last meeting said that local government’s negative debt growth should be suppressed, but the meeting said it would “manage” local government debt risks.
However, experts predicted that the Chinese government’s fiscal stimulus measures are likely to be reduced. This is because the fiscal deficit is at an all-time high, and the financial burden of local governments has increased due to increased spending to control COVID-19. In fact, he promised active fiscal policy at the meeting, but declined to talk about infrastructure investment and tax cuts.