GDP showing more signs of stabilizing

Wu Xiaoqiu, Huang Qifan and Peng Sen (from left to right) at a high-level dialogue on China's reform and economic prospects during the ongoing Boao Forum for Asia Annual Conference 2025. (FENG YONGBIN/CHINA DAILY)

China's economy is showing clear signs of steady recovery with a sound showing in the first two months, and is back on track for healthy, sustainable growth, bolstered by a mix of stimulus policies and meaningful reforms measures in the pipeline, economists said on Tuesday.

As the world's second-largest economy still grapples with pressing challenges from lack of effective demand, downward pressure and subdued expectations, they emphasized the need for further deepened reforms and opening-up as well as targeted measures to accelerate the shift toward consumption-driven growth.

"China's economy has weathered storms and is now firmly on the path of stable, healthy and sustainable development. This recovery trend is irreversible," Peng Sen, president of the China Society of Economic Reform, said during a high-level dialogue on China's reform and economic prospects during the ongoing Boao Forum for Asia Annual Conference 2025. The forum will last from Tuesday to Friday in Boao, Hainan province.

Looking ahead, Peng, who is also former deputy head of the National Development and Reform Commission, said China's long-term goal for 2035 is for per capita GDP to reach the level of moderately developed countries, which requires doubling the nation's total GDP from its 2020 level and implying an average annual GDP growth rate of 4.73 percent.

"If we can achieve 5 percent GDP growth this year, we can meet the objectives for the period during the 14th Five-Year Plan (2021-25). However, the key challenge is maintaining stability and preventing economic downturns," he added.

Peng said that while stability is crucial, the ultimate goal is seeking progress through high-quality development and deepened economic reforms.

"Reform and opening-up remain key for China's economic future," Peng said, adding that the key focus should be placed on deepening economic structural reforms.

Despite the continued recovery trend, China's broader economy is still facing pressing challenges from lackluster demand, operational difficulties faced by some enterprises and still lukewarm expectations.

Peng attributed the sluggish domestic demand to China's previously long-standing emphasis on investment-led growth over consumption. "China's total household consumption accounts for just 38 percent of GDP, compared to around 60 percent in most developed countries. If the gap is not addressed, achieving high-quality growth will be difficult," he added.

Recently, the General Office of the Communist Party of China Central Committee and the General Office of the State Council — China's Cabinet — issued a special action plan to boost consumption. According to the plan, the country will ramp up its support for the consumer goods trade-in program and utilize more fiscal funds to empower local authorities in expanding these initiatives.

Peng spoke highly of the government's intensified efforts to bring about a consumption-driven economy, adding that structural reforms in fields like income distribution systems, market-based allocation of resources as well as fiscal and taxation systems will be crucial in shifting toward a consumption-driven economy.

Wu Xiaoqiu, dean of Renmin University of China's National Academy of Financial Research, stressed that confidence among consumers, investors and businesses is fundamental to growth.

"Confidence stems from a sound legal system. While China has made significant progress in legal reforms, further improvements are necessary to meet the standards of developed economies," Wu said.

Wu underscored that institutional reforms — more — so than short-term policies — will be critical in shaping China's economic trajectory. "Policies provide temporary adjustments, but institutions and the rule of law create a stable foundation for long-term prosperity," he said.

Despite ongoing trade tensions and decoupling efforts by some nations, Huang Qifan, former mayor of Chongqing, said China has made considerable progress in deepening reforms and expanding high-standard opening-up over the past decade.

"No matter what the global situation is, China's doors to the outside world will continue to open wider," Huang said.