China has had a good start to the year. Economic data showed that it had overcome the worst threat to its economy in decades — the Covid pandemic — and emerged as one of the few economies that managed to expand in 2020. The lead indicators for the economy show that it will rebound strongly this year. Indeed, most forecasters believe that it would have largely made up for the losses induced by the pandemic by the end of this year. As President Xi Jinping prepares to celebrate in July the 100th anniversary of the founding of the Chinese Communist Party which he leads, he and his colleagues have every reason to be confident about future prospects.
Nevertheless, the Chinese economy faces several challenges from both external and domestic sources. China demonstrated some of its formidable strengths in the way it handled the pandemic. But achieving China’s “centenary goal of fully building a modern socialist country” will require more courageous — and sometimes risky — policy reforms.
China’s challenges have grown