The economy is set to rebound in 2021, leading the global economic recovery once again.
However, policy-makers will pursue quality over quantity in order to avoid exacerbating existing economic fragilities. This means that Chinese consumers will drive this momentum, which is a meaningful departure from the previous model of investment-led growth.
Meanwhile, the upcoming 14th Five-Year Plan will also aim to achieve developed-nation per capita income levels before 2025, requiring 8.0% GDP growth this year and around 4.5% to 5.0% thereafter
Better economic activity will support bond yields and currency appreciation, while industrial upgrading and innovation will require further deepening of financial reforms. The latter will be key to facilitate resource allocation and wean Chinese companies off their historical dependency on bank loans.
