By Zhao Xiaopeng
The Chinese economy is intricate, yet one of the most straightforward ways to assess it is through agricultural and industrial output,” stated Yao Jingyuan, former Chief Economist of the National Bureau of Statistics of China, during the 2024 annual meeting of Harvard Business Review in Beijing. “In 2024, China has recorded a significant grain harvest and substantial growth in industrial output, underscoring its stable and robust production capacity.”
With almost four decades of experience in economic analysis, Yao is well-versed in China’s economic indicators. He began by highlighting the impressive performance of the agricultural sector, projecting that national grain output will reach a new high of 1.4 trillion jin (approximately 700 million tons) this year—an increase of about 100 billion jin (50 thousand tons) compared to the average of the past nine years. This achievement not only signifies several consecutive years of ample grain production in China but also reinforces the country’s food security.
Yao emphasized the importance of stable agricultural product supply. “Rather than focusing solely on statistics, one should observe the food market,” he remarked, noting the abundance of meat, poultry, eggs, and vegetables, along with a decline in prices.
Regarding the industrial sector, Yao pointed out that equipment manufacturing grew by 7.5%, while high-tech manufacturing surged by 9.1% in the first three quarters of this year. “Manufacturing remains the backbone of the industry and is gaining momentum, particularly in the high-tech sector,” he noted, adding that energy consumption per unit of added value among large industrial enterprises decreased by 3.8% year-on-year in the same period.
“Exports, a key driver of economic growth, have performed impressively this year,” Yao stated. In the first three quarters, China’s exports increased by 6.2% year-on-year, reflecting the country’s sustained competitiveness in global trade.
Yao attributed this strong export performance to three main factors: China’s robust and comprehensive industrial and supply chains, its formidable production capacity, and the vitality of the private sector, which constitutes 55% of the economy. “Therefore, I anticipate that China’s import and export activities will maintain positive momentum over the next two months,” he asserted.
However, Yao also highlighted pressing issues that need attention. By the end of September, the total accounts receivable for enterprises across the country reached 25.72 trillion yuan, representing nearly 30% of the working capital of designated industrial enterprises. This has significantly strained cash flow for businesses. Additionally, inventory levels have reached a historical high of 6.74 trillion yuan.
“To tackle these challenges, the government is implementing policy measures to stimulate investment in three key areas: infrastructure, industry, and property,” Yao explained. “Currently, the most promising area for investment is industrial investment, particularly in large-scale equipment upgrades,” he added.
According to the National Development and Reform Commission, in 2023, investment in equipment for key sectors such as industry and agriculture in China amounted to approximately 4.9 trillion yuan. “The government plans to increase this investment by 25% over four years, targeting 7 trillion yuan by 2027, which translates to an annual addition of 350 billion yuan in new industrial investment,” Yao indicated.
While he acknowledged that investment in infrastructure is more challenging due to local government debt burdens, Yao noted that the central government is addressing this issue through fiscal policy measures. On October 12, the Ministry of Finance introduced targeted incremental policy measures aimed at stabilizing growth. This package includes enhanced support to mitigate local government debt risks, the issuance of special government bonds to bolster the core tier-one capital of large state-owned banks, and the integration of fiscal tools to support the housing market.
“China’s central government has allocated 700 billion yuan from its budget for project investments in major national strategies and capacity-building initiatives in key areas,” Yao reported. Additionally, the full allocation of 1 trillion yuan in ultra-long special treasury bonds—designed to fund significant national strategies and enhance security capabilities—has been made to projects and local governments. Yao anticipates that China will continue to issue ultra-long special treasury bonds in 2025.
Recent data released by the National Bureau of Statistics on October 31 indicated that China’s manufacturing purchasing managers’ index (PMI) reached 50.1% in October, a 0.3 percentage point increase from the previous month, signaling an ongoing recovery and improvement in economic prosperity.
Regarding the real estate sector, Yao noted that although investments, new home sales, and sales volumes all experienced negative growth in the first nine months, positive developments have emerged since September 26, following the central government’s announcement of a goal to stabilize and reverse the downward trend in the real estate market.
According to data from the Ministry of Housing and Urban-Rural Development, in October, the total transaction volume of new and second-hand homes in China increased by 3.9% year-on-year, marking the first growth after eight consecutive months of decline since February of this year. The growth is even more pronounced in first-tier cities, where the transaction volume of newly built homes rose by 14.1% year-on-year, while the transaction volume of second-hand homes increased by 47.3% year-on-year. Cities such as Guangzhou, Shenzhen, and Nanjing saw year-on-year increases in new home transactions exceeding 30%, while Beijing, Shanghai, Shenzhen, and Hangzhou experienced year-on-year growth in second-hand home transactions surpassing 50%.
In terms of consumption, Yao asserted that increasing residents’ income, creating more job opportunities, and fostering personal wealth appreciation are essential for expanding domestic demand. He also highlighted the necessity to stabilize the stock market and gradually elevate it to enhance consumer confidence and stimulate consumption.
Yao expressed strong confidence in the future of the Chinese economy, calling for collaboration across all sectors of society to seize emerging development opportunities. “We must believe that China will overcome challenges and restore public confidence and expectations,” Yao emphasized. “We have faced severe obstacles during our most trying times, such as the dissolution of the Soviet Union in 1991, the Asian financial crisis in 1998, and the U.S. subprime mortgage crisis in 2008. We are in a much stronger position than we were in those situations, and we will succeed once again.”
“Reflecting the theme of this meeting, investing in China truly means investing in valuable opportunities,” Yao concluded.
