China GDP: avoiding ‘middle-income trap’ is key in 2023, and 5 per cent economic growth possible, Beijing adviser says

Prominent economist Wang Yiming’s projection is at the high end of expectations among analysts, and it comes with conditions and concerns

To reach Beijing’s goal of doubling per capita GDP by 2035, Wang says China’s annual economic growth rate ‘should be no less than 4.73 per cent’

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Prominent economist Wang Yiming (pictured) says China may be at risk of becoming stuck in the so-called middle-income trap if economic growth fails to reach its potential. Photo: Xinhua

Published: 12:00am, 24 Nov 2022Updated: 9:16am, 24 Nov 2022

China needs to get its economy back on track as soon as possible to avoid falling into the “middle-income trap”, and the deepening of market-oriented reforms is key, according to a Chinese government adviser.

And the growth rate of the world’s second-largest economy next year could potentially surpass 5 per cent, said Wang Yiming, vice-chairman of China Centre for International Economic Exchanges.

But for this to happen, coronavirus disruptions must be mitigated or ended; government policies to boost the economy must be effective; and reform and opening up must be expedited to improve market confidence, he said on Wednesday at an event organised by the Hong Kong Institute for Monetary and Financial Research.

China’s current economic growth rate is lower than its potential. This may lead to some medium- to long-term impacts, which are rather structural in nature

Wang Yiming

“China’s current economic growth rate is lower than its potential. This may lead to some medium- to long-term impacts, which are rather structural in nature,” Wang warned.

“For example, there are changes in the micro scene, such as enterprise decisions becoming more short-term in nature, risky investment appetite being reduced, and household consumption becoming more prudent.

“It takes some time for all of these to be rectified.”

Wang’s comments add to the recent concerns that other government advisers have shared publicly, with some flagging the urgent need for China’s economic policymakers to realise the country’s full growth potential.