China is capable of attaining double digit GDP growth this year but will instead strive for steady and sustainable economic expansion to avoid overheating.
Economists said the economy has to grow within an appropriate range in the region of 6% for the recovery to remain sustainable. They noted other key non-GDP factors such as employment, prices, income, and environmental protection might weigh on growth later in the year.
The high quality recovery of the Chinese economy without overheating from the ravages of COVID-19 is paramount, said government sources. It remains critical the country's economic managers take an approach conducive to continued economic expansion and not over rapid growth.
Optimism for China's rapid expansion this year follows predictions by some institutions and experts of double-digit GDP growth in the first quarter. Other economists, however, point out any sharp increase in Q1 GDP will be normal given the massive 6.8% slump during Q1 2020 due to the pandemic.
"This does not mean that the Chinese economy is back on a high-growth track," argues Sun Guojun, an official with the Research Office of the State Council.
He said the Chinese economy is still recovering from the battering it took from COVID-19. This recovery can be seen if one compares Q1 economic indicators with those in Q4 2020 or makes comparisons after deducting abnormal fluctuations.
Sun agreed with the government's intention to avoid "sharp turns" while maintaining the continuity, stability, and sustainability of China's macro policies.
He noted China would roll out new tax-cuts targeting micro and small businesses, as well as the self-employed, and increase tax incentives to stimulate investment in research and development to keep growth humming.
The call for high-quality growth was broached by Premier Li Keqiang during the recently ended 13th National People's Congress. Li said China would devote its full energy to promoting high-quality development, reform, and innovation.
"In 2021, China will continue to face many development risks and challenges, but the economic fundamentals that will sustain long-term growth remain unchanged," said Li.
China will likely exceed its GDP growth target of 6% for 2021 as it moves more into high quality development, said the European Union Chamber of Commerce in China.
Jörg Wuttke, president of the European Chamber, said China's GDP growth might easily exceed 8% this year with the emphasis on quality over quantity.
"By setting it at 6%, I think his (Premier Li Keqiang's) message is to all the governors, to everyone across China is go for qualitative growth; don't stretch yourself and go for quantity," said Wuttke.
Wuttke isn't alone in predicting higher Chinese economic growth. The World Economic Outlook from the International Monetary Fund released in January forecast an 8% expansion for China's economy this year.
