Sustaining the recovery from Pandemic and War, will require both monetary and

fiscal support as well as accelerated structural reforms

China’s economy is set to rebound this year too as mobility and activity pace up,
providing a boost to the global economy. Chinese economy is now expected to
contribute a third of global growth this year.

New Growth Engines

➢ Beijing’s new policy to send data to less-well-off inland areas for processing
should fuel digital growth and connect up regions

➢ Other new ambitious inter-regional projects include turning more to the

Central and Western areas for renewable power

➢ As the inland catches up with the coast, this could unlock a major new high-
quality growth driver for the nation

➢ As the Chinese economy moves towards high-quality development,

innovation has become the first driving force for development, leading to the
vigorous development of the "three new" economies: new industries, new
formats, new business models as suggested by Zhang Deyong, a researcher at
the Institute of Financial and Economic Strategy of the CASS

➢ These new economies are based on innovation, and have been supported in
various ways by digitalization, artificial intelligence, big data or online retail

➢ In line with these "three new" economies, a continuous emergence of new

consumption models. Although the growth rate dropped by 0.5 percent from
January to April, the investment in high-tech industries increased by 11.9 per
cent year-on-year. Investment in the manufacturing industry focusing on the
digital transformation increased by 15 per cent. Since the beginning of 2019,
 the high-tech industry has grown rapidly. In May, the added value of high-
tech manufacturing increased by 9.4 per cent.

➢ Processing Eastern data in the West:

This mega-project aims to gather data in the more prosperous cities along China’s
eastern seaboard and send it to the more spacious computing hubs in the west of
the country for processing and storage. Now, data centers are mostly distributed in
the more crowded and energy-stretched Eastern regions. This new initiative places
four computing hubs in the Western region which is rich in renewable energy and
hence greener. Ten national data center clusters are also planned. The project may
drive RMB400bn in investment per year with the construction of computing hubs
and data centers, as well as generating new job opportunities.

➢ Mega cross-regional projects to drive inclusive growth:

To play to each region’s comparative advantage, Beijing is looking to design and
promote projects that enable less prosperous regions to catch up. Some progress
has been made but the gap is still wide: in GDP per capita terms, Beijing is
comparable to Spain, while Gansu in the Western region is similar to Colombia.
Such initiatives also fit with the strategy to increase energy, supply chain security,
and self-sufficiency.