China’s insurance market to double in 10 years, Swiss Re CEO says

The size of China’s insurance industry is expected to double in the next 10 years amid strong economic growth, making the country an even more important market for the group, said Christian Mumenthaler, group CEO of Swiss Re.

China’s economy continued its steady recovery in April, official data released on Friday showed.

The country is expected to maintain an annual economic growth rate of about 5 percent, continuing to rank among the world’s fastest-growing economies, Mumenthaler said in an exclusive interview with China Daily.

China’s insurance market is growing faster than its economy, Mumenthaler added.

“The size of premiums could double in 10 years, so we want to be part of that. I’m very excited about the market opportunities in China,” he said.

Consultancy expert: China’s economy to have steady recovery

China’s economy showed signs of stabilization at the beginning of the year, laying the foundation for a steady recovery throughout the year, said Ben Simpfendorfer, a partner at consultancy Oliver Wyman.

“I think the economy is stabilizing,” Simpfendorfer said in an exclusive interview with China Daily. “The foundations are there for recovery.” While China’s growth target of around 5 percent for this year seems challenging, Simpfendorfer said he believes the goal is “still achievable if the real estate sector begins to stabilize”.

Dismissing the speculation that China’s economy is showing signs of peaking, he said the “long-term growth prospects still look very good”.

“China hasn’t peaked. It’s evolving,” he added. “The country will remain a global manufacturing hub and a global innovation hub. China matters for the global business and the global economy. There isn’t another China out there at this point.”

Expert: 2024 growth target is achievable

China’s economic outlook is poised to improve in the following months, buoyed by robust fiscal spending, and the country’s growth target of around 5 percent for 2024 is achievable, according to a renowned economist.

Huang Yiping, dean of Peking University’s National School of Development, told China Daily in an exclusive interview that the nation’s economy is relatively stable. “There is hope that the economy may continue to improve, given that the government will expand its fiscal spending and provide more support to economic growth in the coming months.”

Huang called for more efforts to further boost economic recovery and stabilize the employment rate, which will bolster consumer confidence and increase incomes for households.

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Debunking flawed Western narrative – ‘China’s economy peaks’

A view of the skyline of Beijing's CBD area. Photo: VCG

A view of the skyline of Beijing’s CBD area. Photo: VCG

Bearish views about China’s economy appear from time to time but are always proved wrong. Recently, some Western politicians and institutions have come up with the “China peaks” theory, which may seem novel but is exactly the same as the so-called “End of China’s economic miracle” theory back in 2013. 

History is a long-cycle development process, and arbitrary claims of “peak” and “end” often go against logic and common sense.

Over the past decade, the Chinese economy has been moving forward and experiencing waves of development, despite the Western hype shifting from “disappointing” to “near collapse.” In 2023, China’s GDP surpassed 126 trillion yuan, with per capita disposable income at 39,218 yuan, more than double the figures of 56.8 trillion yuan and 18,311 yuan in 2013. The 5.2 percent growth rate is also significantly faster than the US’ 2.5 percent, the eurozone’s 0.5 percent, and Japan’s 1.9 percent. With its contribution to world economic growth continues o exceed 30 percent, China remains an important engine of global economic growth.

In the face of the rosy data and solid facts, where did the “China peaks” theory come from?

First, the “pandemic impact” rhetoric says that the COVID-19 pandemic has accelerated the process of peaking.

Indeed, the three-year COVID-19 pandemic has had a significant impact on both the world and the Chinese economy. But historically, no matter how severe a pandemic is, it is a short-term issue. No matter how big the impact on the economy, it will not fundamentally change its long-term development trend. China was the first major economy that saw growth resume after the pandemic. Now, its “scar effect” on China’s economy has faded. Last year, the total retail sales of consumer goods in China exceeded 47 trillion yuan, up 7.2 percent year-on-year, indicating that consumption is again driving economic growth.

Businesses are also booming. Boosted by last year’s May Day holidays and National Day holidays and this year’s Spring Festival, renowned domestic brands have introduced new products, various places have promoted local tourism, and a variety of new consumption scenarios have emerged. Whether it is the night economy in Changsha, or the Hangzhou Asian Games, China’s economic recovery is clear for everyone to see. This surging energy is propelling China’s high-quality development forward with renewed vigor.

Second, the “demographic dividend” narrative argues that, with China’s total population now peaking, the disappearance of the demographic dividend will make China’s growth miracle of the past 40 years unsustainable.

In recent years, significant changes have taken place in the size and structure of China’s population. But there are still about 865 million people aged 16 to 59, who are at working age. With the labor participation rate at a relatively high level in the world, China still has abundant labor resources and its demographic dividend hasn’t gone away. Furthermore, in terms of economic development, the input of the labor force is important, but the input of effective labor is even more important. Effective labor can be defined as the product of the number of workers and their level of education. Essentially, compared with the size of the population, the quality of the population is a key determinant of long-term economic growth.

At present, the average years of education of the working-age population in China have risen to 11.05 years, and the number of people that have had higher education has exceeded 240 million. China boasts the largest number of science and technology professionals, as well as research and development personnel globally. China’s large number of science and engineering graduates has formed an “engineer dividend.” Overall, despite the aging population, effective labor has been increasing every year, transitioning from a “demographic dividend” to a “talent dividend.” This offers solid human resources foundation for high-quality development.

Third, it has been claimed that the US’ technological suppression and decoupling will hinder China’s development. This argument suggests that China is still in the process of technological transformation, and Western tech blockades will impact the development of China’s high-tech industry and stymie China’s economic rise.

Can technological suppression block China’s development path? The question has been answered by history more than once. China has been repeatedly besieged and suppressed, but has been able to overcome difficulties even when the economy was still underdeveloped. Today, given the solid material and technological foundations in China, the so-called “small yard high fence” attitude will not stop China’s innovation and development.

Today, China remains committed to keeping its doors open and continues to advance in technology through independent development. China has increased its investment in technological innovation and achieved remarkable progress.

For instance, the domestically produced C919 large passenger aircraft has entered commercial flights. The homegrown large cruise ship has also started commercial operation, and the Shenzhou series of space missions have achieved remarkable success.

China’s cutting-edge technology field is constantly accumulating energy, demonstrating the strength of Chinese innovation. China has the largest number of global top-100 technology innovation clusters in the world, and emerging technologies such as artificial intelligence and blockchain are growing in importance. New-energy vehicles, lithium batteries, and photovoltaic products have become new highlights of China’s manufacturing industry.

China is leveraging the advantages of a new type of national system with concentrated efforts and resources for important events or projects, with abundant talent, a huge market, and complete industrial support. The innovation drive and development vitality of China are flourishing, and new quality productive forces are emerging, demonstrating strong support for high-quality development.

Fourth, it has been claimed that a slowdown in economic growth suggests that a “peak” has been passed. This claim argues that the miracle of high-speed growth of the Chinese economy brought about by special domestic and international opportunities is unsustainable, and that China will fall into a growth stagnation predicament.

After more than 30 years of high-speed growth with an average annual GDP growth rate of 9.9 percent, the growth rate of the Chinese economy has indeed slowed down in recent years, but this is a natural result of the evolution of economic development. 

Throughout history, economies have typically experienced a natural decline in growth rates, transitioning from periods of rapid growth to more stable, moderate growth. This trend is commonly observed in the development of modern economies and is considered an inevitable occurrence. 

In the industrialization process of various countries, such as Germany, Japan and South Korea, after experiencing two to three decades of high-speed growth, the pace of the growth will slow down. This is an entirely normal phenomenon.

Moreover, the phased transition of China’s economic growth is intertwined with the long-term structural adjustment of the world economy and the integration of a new round of industrial revolution. If China continues to pursue high-speed growth, it would not only go against economic laws, but also exacerbate the existing contradictions of traditional extensive growth methods, bringing many risks and causing economic imbalance, lack of coordination, and unsustainability. 

Transitioning to a new stage of growth also means changing the driving forces. Outdated productivity continues to decline, while advanced productivity continues to emerge, forming new growth momentum.

Observing the theme of high-quality development in the Chinese economy, one should not only look at the size, but also the quality. Combining growth data and efficiency data from recent years, the Chinese economy has not peaked at all, but has achieved a qualitative and effective improvement while overcoming many difficulties. 

Currently, China’s comprehensive advantages in human resources, capital formation, infrastructure, and industrial system are outstanding, and the potential for economic development is huge.

For example, the savings rate is still at a high level; a relatively complete and large-scale infrastructure network has been formed; and a large-scale, comprehensive, and strong complementary industrial system has been established. According to calculations by many domestic and foreign research institutions, China’s potential growth rate can still reach around 5 percent for the long run.

Those who repeatedly curse the Chinese economy have had their views rebutted by the facts. Whether it is simply applying Western theories to analyze the Chinese economy, exaggerating short-term issues, having a subjective bias, or acting out of narrow self-interest, the smears are based on misconceptions about the Chinese economy.

The Chinese economy has been advancing steadily, with firm goals and adjustments that keep pace with the times.

Looking into the future, China’s economy has solid support from its huge material and technological foundations, advantages in supply capacity with a complete range of industrial sectors, potential demand advantages from the huge domestic consumer market, talent advantages, advantages in emerging industries, and advantages in continuous institutional innovation through reform and opening-up.

In developing new quality productive forces, the growth potential of the Chinese economy will continue to be unleashed.

China’s economy is currently at a crucial stage of transitioning toward high-quality development. During this process, various problems and challenges are inevitable, such as insufficient effective demand, overcapacity in some sectors, weak social expectations, and numerous hidden risks. China is addressing these problems, making effective use of ample policy space, and continuously introducing targeted measures to resolve them. The performance of China’s economy in 2023 was the best proof.

American scholar George Friedman, who announced the “end of the Chinese economic miracle” a decade ago, wrote that “no one country can replace China, but China will be replaced. The next step in this process is identifying China’s successors.”

Ten years on, China has recorded ever outstanding and profound development achievements: The next China is still China!

The article is an economic commentary first published in The Economic Daily. [email protected]

Well calibration of fiscal, monetary policies to ensure 5% GDP growth in China

A view of the Lujiazui area in Shanghai Photo: VCG

A view of the Lujiazui area in Shanghai Photo: VCG

A well-calibrated fiscal and monetary policy combination, being crafted and orchestrated by Chinese government, will help resolve the intrinsic problems hidden in China’s economy. An aggressive fiscal stimulus, coupled with proactive while prudent monetary policy, is generally thought to provide the economy with sustainable energy, shepherding it to grow by around 5 percent in 2024. 

Independent economists of many international organizations give high marks for Chinese economic policymakers’ learning and wit in blending the monetary and fiscal policies in the past four decades to shore up rapid economic growth, and at the same time successfully resisted the cyclical pressures of inflation and deflation. 

Entering 2024, China’s economy has to overcome the “scar effect” left by the COVID pandemic, including a relatively lackluster domestic consumption and a churning real estate market. Amid the lingering concern about another public health upheaval, the people now tend to snap shut their pocketbooks, and the millennials and generation Z are increasingly hesitant to raise children.

Under these circumstances, the traditional days of steadily growing consumer prices are gone, as China witnessed several months of negative CPI growths in the second half of 2023. To deal with the deflationary pressure, China’s central bank moved to reduce the bellwether loan prime rates (LPR) of both one-year and five-year lengths. Last month, the central bank went aggressive, cutting the five-year LPR by a full quarter percentage, which also has the effect of ramping up the country’s humdrum housing sales as mortgage rates are slashed too. 

Meanwhile, the policy-makers decided to introduce proactive fiscal stimulus measures to fuel up public spending and economic growth. 

In 2024 alone, at least 4.9 trillion yuan of central and provincial government bonds will be sold, with the proceeds to be channeled to building up important public infrastructure projects and fostering new quality productive forces to meet China’s massive market demand for home-grown advanced semiconductor chips, newest AI and algorithm innovations, nationwide 5.5-G mobile network coverage and highly efficient digital business platforms – able to catapult China’s economy to new heights of growth before 2050.

China is determined to “choose transition from high rates to high-quality of growth,” said International Monetary Fund Managing Director Kristalina Georgieva at the just concluded China Development Forum held in Beijing. In her speech to the event, she remarked that China has entered a new era of economic growth, and the country will continue to be a key driver of and a contributor to global economic growth in the coming years.

And, renowned US economist Nicholas Lardy, senior fellow at the Peterson Institute for International Economics and a former senior fellow at the Brookings Institution, told Chinese media that it is unwarranted for many media pundits in the West to disseminate the narrative that “China’s economy is collapsing” and faces a catastrophic outcome. Instead the economy is recovering, and last year’s 5.2 percent GDP growth “is impressive” among major economies. 

For a long time, one of the important reasons why the Chinese economy has been able to scale new heights constantly by overcoming domestic difficulties and withstanding external headwinds is its deep understanding of economic laws, and the decision makers’ creative ways to exploring new and potent growth drivers, as well as the country’s firm determination to implement systemic restructuring, such as the country’s unswerving focus on developing clean renewable energies and battery-powered electric trucks and cars.  

Georgieva thought highly of China’s green development. She described China as a global leader in deploying renewable energy with enormous potential, adding that China was making rapid progress in green mobility. China’s remarkable development success has delivered tremendous benefits to hundreds of millions of people in the world, she said.

Georgieva said that China’s high-quality development still has a bearing to deepening marketed-regulated reforms and giving priority to private sector growth. Deep structural reforms can enhance the conditions for entrepreneurship, innovation and economic performance. For example, a boost to government finances at the macro level could allow some tailored micro changes in taxation policies on businesses to foster fast growth of new enterprises, aligned with the central bank’s monetary policy to increase liquidity through reserve ratio reductions and interest rate cuts. 

And, ramped-up government spending is a key component of aggregate demand that can be strategically important for economic development. China’s central government has announced the issuance of new ultra-long special treasury bonds in each of the following several years to focus on funding major national projects. No matter it is the development of industrial parks, transportation hubs, public services and highly educated and skilled Chinese work force, government spending is indispensable to underpin the growth of future strategic industrial lines. 

The drivers of demand include household consumption of goods and services, private investment, government investment and net exports. As to augmenting China’s domestic consumption – a pivotal part of economic growth, the government has pledged to implement a national drive to provide incentives to encourage trade-in of old household appliances, cars and furniture with new models. The replacement of old automobiles, inefficient in fossil fuel use and polluting the air, with Chinese brand-new electric vehicles will also significantly help improve China’s urban environment. And, Chinese local authorities are encouraging citizens to have more family outings and leisure time to increase cultural and tourism spending.

Regarding foreign trade, despite the headwinds of geopolitical tensions which are affecting trade and capital flows, China saw a robust take-off of foreign trade in the first two months this year, largely thanks to the high-quality and low-price of made-in-China goods, like heavy machinery, home appliances, electric cars and a wide variety of electronic devices. In 2024, China’s total exports of goods will likely grow by 6-8 percent over 2023. Investment, domestic spending and export will guarantee the economy to expand by around 5 percent this year.

IMF head Georgieva said she is confident that China and the world can tackle the challenges this globe is now facing and they can always cooperate to create a more prosperous future in this century. 

The author is an editor with the Global Times. [email protected]