SHANGHAI — Chinese economic experts summarized the main challenges of 2021 and mapped out economic policy priorities for 2022 during an academic forum hosted by the Information Office of Shanghai Municipality on Monday. The meeting was held to discuss highlights from the annual Central Economic Work Conference held in Beijing from Dec. 8-10.

While China’s fourth-quarter GDP outlook has yet to be published, the country’s economy experienced a quarter-by-quarter economic slowdown this year. Experts said the downturn was mostly due to coronavirus-related restrictions, power shortages, crackdowns on a range of industries, debt troubles in its property sector, and local government deficits.

“2021 was the second year of the global COVID-19 pandemic,” Sun Lixing, the head of International Investment Research Office at Shanghai Academy of Social Sciences, said at the forum. “The pandemic has become an unavoidable variable affecting the future economy.”

During the Central Economic Work Conference, Chinese leaders said that “demand contraction” in domestic and overseas markets, “supply shocks” amid disrupted global shipping and changing international relations, and “weakening expectations” of investment return were the main economic challenges this year. According to Sun, weak demand and supply shortages would affect the manufacturing sector’s productivity, which is a decisive factor for the country’s steady economic growth and employment.

“Enterprises would be less motivated to invest in manufacturing if the return rate is expected to be low, and pivot to investing in the virtual economy,” Sun said. “Under the pressure of the economic downturn, if most capital goes to the virtual economy, the real economy will decline even more. Moreover, real estate speculation will inevitably lead to asset price bubbles and systemic risks.”

Concerning supply shortages and soaring prices of primary goods — including agricultural produce and raw industrial materials — this year, experts also highlighted the importance of reserving such goods, which was identified as one of five key issues of future development. The other key issues included “common prosperity,” capital regulation, financial stability, and carbon neutrality.

“The rising price of key items such as coal not only affects the operation of enterprises but also livelihoods,” Wang Zhen, the deputy dean of Shanghai Academy of Social Sciences, said during the forum.

Wang added that small businesses were still grappling with the COVID-19 control measures, while this year’s employment rates remained lower than pre-coronavirus.

“Although China achieved the eradication of poverty at the end of 2020, there is still a lot that needs to be done in order to prevent poverty from returning to the rural population,” Wang said.

Experts also emphasized how the essence of common prosperity was to build sustainable industries, which creates more job opportunities.

“Common prosperity doesn’t mean taking money from the rich and giving it to the poor,” Sun said. “The poor can’t become rich overnight, otherwise they will lose their motivation.”

(Header image: People Visual)