Promote Competitive Neutrality to Facilitate China’s Economic Development: Outlook, Policy Simulations, and Reform Implementation—A Summary of the Annual SUFE Macroeconomic Report (2019–2020)

Abstract

Twenty nineteen (2019) marked another year of lethargic growth in the Chinese economy amidst escalated internal and external complexities. Internally, the country’s macroeconomic landscape was overcast continuously by fallen consumption growth, plunged growth in manufacturing investment, rapid accumulation of household debt, risen income inequality, and the overhang of local government debt. The nation’s external conditions did not fare any better, with drastically declined growth in imports and exports, continued trade tensions with the US, and weakened external demand. Based on the IAR-CMM model, which takes account of both cyclical and secular factors, the baseline real GDP growth rate is projected to be 6.0% in 2020 (5.9% using more reliable rather than the official data), with a downside risk. Alternative scenario analyses and policy simulations are conducted, in addition to the benchmark forecast, to reflect the influences of various internal and external uncertainties. The findings emanated from these analyses lead us to stress the importance and urgency of deepening reform to achieve competitive neutrality for China’s transformation into a phase with sustainable and high-quality development.

Keywords

macroeconomic outlook / alternative scenario / policy simulation / competitive neutrality / reform / systemic risk / resource misallocation

RIGHTS & PERMISSIONS

2020 Higher Education Press