Real GDP (%)

6.0

2.3

8.1

5.1

5.1

Exports of goods and services (%)

1.5

1.6

16.7

2.4

5.5

Imports of goods and services (%)

0.4

-0.8

7.8

0.4

5.3

GDP deflator (%)

1.3

0.6

Consumer price index (%)

2.9

2.5

0.8

1.7

2.4

Terms of trade (%)

0.6

7.3

-8.8

-3.8

-0.4

Fiscal balance (% of GDP)

Overall

-3.7

-6.9

-6.4

-6.0

-6.1

Headline

-2.8

-3.7

-3.1

-3.0

-3.2

Current account balance (% of GDP)

0.7

1.9

1.7

1.5

1.5

Economic recovery is gaining momentum and policy support is being withdrawn. Private and small firms are hard hit by COVID-19.

Keep monetary policy accommodative by providing sufficient liquidity and not raising policy rates as long as inflation pressure is low and growth is moderate. Raise disclosure standards for private and small firms so that they will be able to finance their viable projects even after policies tighten.

Economic recovery is firming but spending needs towards inclusiveness and sustainability are large.

Emergency stimulus measures should be withdrawn only when recovery is fully on track, with spending increased on social security, health and education as well as on infrastructure investment (such as renewables, urban transit systems and environmental infrastructure). Then a consolidation plan should be announced.

Stress tests indicate that in a severe stress scenario many banks would have inadequate capital.

Abolish reduced loan loss provisioning ratios and disincentivise excessive risk taking by banks.

Generous tax exemptions and reductions continue to curb public revenues. At the same time, most SOE profits are recycled to the sector.

Increase SOE-related fiscal revenues in accordance with OECD SOE corporate governance guidelines, in particular for financial institutions, to better meet longer-term spending needs.

Administrative simplification is ongoing but there is still no one-stop shop everywhere, moreover, requirements vary across the country.

Unify market regulations across the country to create a single market. Implement a one-stop-shop for setting up a business all over the country and move procedures online.

State-owned enterprises and other public entities enjoy implicit guarantees and other preferential treatment. They accumulated large amounts of debt.

Gradually phase out implicit guarantees to SOEs and other public entities by not bailing them out upon their default.

Natural disasters and emergency situations oblige SOEs to provide support without adequate remuneration.

Implement accounting separation and pay fair compensation for SOEs for their services in emergency situations and make them face a level playing field. Adopt the OECD guidelines on SOE governance.

Administrative monopolies inhibit fair competition across sectors and across regions protecting local incumbents.

Strengthen the rule of law and restrict the power of administrative departments to prevent the creation of administrative monopolies. Dismantle existing administrative monopolies and apply the Fair Competition Review Mechanism rigorously.

Corruption mainly manifests in the form of embezzling of public funds.

Enhance transparency and accountability and reduce the concentration of power in managers’ hands. Sign up to the OECD Anti-Bribery Convention.

Market access for foreign companies improved, though joint-venture requirements still exist in some sectors.

Open up further sectors for foreign investment and abolish the requirement of joint ventures.

Many firms do nothing when their intellectual property rights are violated in a lack of recourse.

Strengthen intellectual property rights protection.

Industrial policy priorities make local governments blindly compete in directing public funds to favoured industries, often leading to low-quality, repetitious investment, overcapacity or project failure.

Apply the competitive neutrality principle in the allocation of subsidies and subject the use of public funds to rigorous cost-benefit analysis and third-party evaluation. Make subsidies more transparent.

There is no comprehensive and internationally comparable data in many areas, making it difficult to conduct evidence-based analysis.

Increase data disclosure in all areas of economic activity and report statistical data on an internationally comparable basis.

Income inequalities are large. Few people are subject to income taxes.

Once the recovery is fully established, revamp the fiscal revenue system by widening the base of the personal income tax and abolishing deductions.

Wealth inequalities are large.

Introduce a recurrent tax on the holding of real estate and an inheritance tax.

China has very high life expectancy and low retirement age.

Ensure sustainability of the pension system by linking the retirement age to life expectancy.

Pension contribution rates vary across the country and there are multiple schemes. Contributions are a high burden for the low-income.

Unify the pension system across regions and schemes and make it more redistributive by abolishing the floor and raising the ceiling for contributions.

Absolute poverty by the official definition has been eradicated aided by fiscal support.

Conduct and disclose comprehensive assessment of poverty-related spending and its outcomes to ensure that poverty eradication is sustainable.

COVID-19 highlighted the downsides of low reimbursement rates of healthcare expenses, pushing many people to the brink of poverty.

Reform healthcare by increasing the reimbursement rate of healthcare and medicine to avoid falling into poverty.

Centres for disease control are underfunded and are losing staff. A direct reporting system of infectious diseases to the central government has been established, but it can be blocked at the local level.

Ensure that local centres for disease control are well-funded and staffed so that they can help avoid future health crises. Clarify the mechanism for the infectious disease reporting system and information sharing and guarantee its smooth functioning.

Currently there does not exist a transparent and effective mechanism for global data sharing.

Increase transparency and data sharing with global health experts and organisations and undertake meaningful reforms to strengthen public health and disease surveillance systems.

As recovery gains momentum, pollution is back. Temporary halting of industrial production in polluting industries is not a sustainable solution.

Accelerate the energy transition including by significantly reducing the construction of coal-fired power plants in line with China’s climate commitments.

Pollution is taking a heavy toll on human lives.

Raise environmental taxes on fossil fuels to reduce pollution and strengthen climate mitigation action.

The electricity market reform pilot to sell energy by producers directly to users does include renewables producers.

Allow renewables producers to sell the electricity they produce through the grid.