Experts believed that China would continue to play an essential role in the growth of the Asian region. Analysts said that China’s growth remains crucial for the Asian region despite its move to lean towards its domestic economy.
Eswar Prasad, an economist from Cornell University, thinks China will remain necessary for demand in the region. In a recent interview, Prasad was asked about his opinion on the economic recovery of the world’s second-largest economy means for the rest of Asia, when China is looking inward to focus on its domestic growth.
China remains the largest economy in the Asian region, and the region’s growth heavily relies on China’s development. Prasad concluded that China must prosper so the Asian region can thrive. In general, the growth of Asian economies depends on the development of the world’s second-largest economy.
All Eyes on the Domestic Market
Earlier, analysts said China is redirecting its economic strategy after the country runs into many international market challenges. The Asian powerhouse economy eyes on its vast domestic market instead.
Chinese President Xi Jinping wants China to rely more on domestic consumption and local technologies to face uncertainty in the international arena.
Need to Focus on SMEs
Experts said that China needs to keep an eye on its small and medium enterprises. They predicted that these enterprises would be crucial for its economic growth.
Prasad explained that if China wants to prosper, it needs to put credit into small and medium enterprises. The professor said that SMEs are among the dynamic parts of its economy that can create better employment and productivity growth. He added that both jobs and productivity growth are essential to the country’s development and crucial to the Asian region’s economies.
Moody’s Analytics chief economist Steve Cochrane said that any form of economic stimulus in the future should focus on small and medium enterprises. Cochrane agreed that SMEs are the dynamic component of China’s economy that can grow and diversify the Chinese economy.
On the Positive Note
China is bouncing back from the impact of COVID-19. For the third quarter of the year, the country’s GDP grew by 4.9% compared to the previous year. Although, it was lower than the Chinese economists forecast of 5.2% growth in the third quarter.
Cochrane said that it is remarkable that China grew so quickly despite the global economy’s frailty at the moment. The International Monetary Fund predicted that China is the only major global economy to record growth this year at 1.9%.