Growth in private investment signals rebound in confidence: China Daily editorial

There are many indicators with which to evaluate the performance of an economy, for instance, the growth of gross domestic product, enterprises' sales revenue and the total retail sales of consumer goods. Yet it is private investment in fixed assets that is the best indicator of people's confidence in the economy.

While attention has focused on China's foreign trade over the first 11 months of this year, 1.8 percent year-on-year, the growth of private investment in fixed assets should not be ignored as a key barometer of the prospects of the economy.

Private investment in fixed assets in the country rose 2.8 percent in November from the month before, meaning from January to November it registered growth of 0.2 percent year-on-year. But the November rise was the first growth it had registered this year. That it has taken until the end of November for that to happen reflects the severity of the situation the country faced.

The International Monetary Fund has predicted that the Chinese economy will grow 1.9 percent this year, the only major economy to see positive growth, with the global economy forecast to contract 4.4 percent, and China's economy is expected to rebound 8.2 percent next year. The World Bank predicts the world economy will shrink 5.2 percent this year, and China's growth will be 1.6 percent this year, and 7.9 percent next year.

The positive growth of the country's private investment in fixed assets signals the perception that the strong rebound momentum of the world's second-largest economy will not be reversed. It can be taken as a sign that the country's pro-growth, pro-employment and pro-livelihood policies have worked well, as they have helped propel the nation through the most difficult stages of its recovery, and it is now perceived to be on its cruise trajectory.

More important, this has been achieved without inflating the prices of consumer goods, as has been the case in many other major economies. The consumer price index was 2.7 percent from January to November, falling within a healthy range. That means the pressure on people's livelihoods, particularly the most vulnerable, has been greatly relieved.

Statistics show that rather than the real estate market, most private investment has gone into production and research. The investment in high-tech industries soared 11.8 percent year-on-year from January to November, 2.1 percentage points higher than that in the first 10 months this year, suggesting the momentum will continue well into next year.

And the continuous decline in the number of unemployed for the four months till November can also be partly attributed to the increase of private investment in production.

As such, with pandemic control measures normalized, policies can now be recalibrated to focus more on supporting innovation, opening-up and modernization of governance, paving the way for the economy to power forward in the coming year.