China achieved 2.3 percent GDP year-on-year growth in 2020, becoming the only major economy to register positive growth despite the global economic recession triggered by the novel coronavirus outbreak.

This would not have been possible without the Chinese government implementing aggressive and proactive fiscal policies, boosting market confidence. In this year's Government Work Report, Premier Li Keqiang said the country will continue the macro policies to achieve sustainable, higher-quality development.

China still needs to optimize operations in some areas of the economy. In 2020, the proportion of final consumption expenditure in China's GDP was 54.3 percent, much lower than the around 70 percent in middle-income countries and 80 percent in developed countries.

A 3.9 percent year-on-year decline in total retail sales of consumer goods in 2020 means China needs to redouble its efforts to activate its consumption potential.

Also, total capital formation contributed 2.2 percentage points to China's GDP growth in 2020, and the increase in GDP was basically driven by investment. In the new era, to promote higher-quality economic and social development, the country still needs to maintain a healthy GDP growth. Given the complicated and changed external environment, it is important to accelerate China's economic recovery and development at the start of the 14th Five-Year Plan (2021-25) period.

China also needs to take measures to ensure long-term, sustainable growth in consumption and to increase people's incomes. It should increase fiscal subsidies to support enterprises increasing employment, further increase spending on education, healthcare, social security and other public services, ensure people get equal access to basic public services, and narrow the income gap among different regions and between urban and rural areas.
The country should also promote investment, spend key funds on infrastructure, advanced manufacturing and people's well-being, as well as launch some public service projects in the fields of education, healthcare, elderly care, childcare, affordable housing, and major transportation, energy, and water conservancy projects.

It should also deepen supply-side structural reform, comprehensively implement institutional tax cuts and implement new structural tax reduction measures to ensure all market players benefit from State policies.