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According to the National Development and Reform Commission (NDRC), in the first quarter of 2022, China’s economy will face more uncertainties, and as countermeasures, the Chinese government will advance the implementation of some policies, the progress of some infrastructure construction projects, and the execution of some domestic demand promotion efforts.
China’s economic development for 2022 will face some challenges and pressures, including the impact of consumption in some Chinese cities by outbreaks of COVID-19 cases, lower investment growth, and greater uncertainties in imports and exports.
Some Chinese enterprises may face shortages of production materials, medium, small and micro enterprises may still face difficulties in trade and operations, and market sentiment and business confidence may also be dampened (amidst the increased uncertainties).
To have a good start of 2022, Beijing will accelerate the progress of 102 key projects for the period of the 14th Five-Year Plan (2021-2025), and in terms of infrastructure construction projects, the focus will be on traditional ones such as transportation, energy, water conservation and irrigation, agriculture, environmental protection and logistics, affordable housing, and civil engineering projects as well as new ones such as 5G, data center, and industrial Internet.
In addition, China will increase investment in the manufacturing sector to help related enterprises with their energy saving, decarbonization, upgrading, and location optimization.
For 2022, China’s central government will adhere to the general principle of stability and then progress, keeping economic growth within a reasonable range, and China’s active fiscal policy will accordingly focus on fast and sufficient fiscal support, as well as granting tax and fee relief to medium, small and micro enterprises, self-employed citizens and domestic manufacturers.
The country’s monetary policy will remain stable with moderate flexibility to ascertain reasonably sufficient capital flow and encourage financial institutions’ support of the real economy with lower costs.
Regarding power and auto chip shortages, China has made some progress, such as thermal coal stocks for power generation now sufficient for 20 days with coal prices falling substantially and IC production up 33.3% year-on-year for 2021 with auto chip supplies increasing.
As of January 16, thermal coal inventories at power plants under National Grid management reached a record high of 166 million tons or equivalent to 21 days of consumption.
In the fourth quarter of 2021, coal transport by rail grew 20% year-on-year in China, and coal flows at ports in northern China exceeded their respective records, indicating that China’s coal transport will be guaranteed.
China’s energy consumption could continue with relatively high growth, noting that in 2021, the country’s energy consumption grew by 10.3% year-on-year, or 1.4 percentage points higher than the average growth over the period of the 13th Five-Year Plan (2016-2020).
Official data also showed that China’s 19 provinces, autonomous regions, and municipalities recorded their energy consumption exceeding 10% year-on-year in 2021, including Tibet, Qinghai, Hubei, Jiangxi, Zhejiang, Sichuan, Fujian, and Guangdong were the eight with their energy consumption exceeding 13% year-on-year.
In addition to stimulating domestic demand for its economic growth, China has also actively sought development opportunities in the overseas market, sharing that by the end of 2021, China has signed cooperation agreements with 147 countries and 32 international organizations under the “Belt and Road Initiative”.
As for 2022, Chinese financial institutions, state-owned enterprises and real estate developers can issue more “green development” financial products in the global market to sponsor their enterprises under Beijing’s plans of “carbon peak” and “carbon neutral”.
In 2021, Chinese enterprises have already issued 58 “green development” bonds, including medium- and long-term bonds, with a total value of $21.47 billion, or a 162.8% increase on the year, and 12 “sustainable development” bonds, or 12 times the previous year.
