(Yicai) Oct. 31 -- China’s economy is recovering despite the challenges, and policy makers should focus on medium- and long-term growth rather than taking a hasty approach to stimulus, experts said at the recent International Finance Forum annual meeting.

China’s economic data continues to improve, but market sentiment is relatively pessimistic, reflecting investor concerns about the longer term growth potential, Ding Shuang, chief economist at Standard Chartered Bank China and North Asia, said at the IFF’s 20th meeting held in Guangzhou from Oct. 27 to 29.

The economy is rebounding, so talk of a strong stimulus package would be misplaced unless the employment situation deteriorated sharply, Ding noted.

Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, said the “challenges are not only short- and medium-term, but also long-term as to how to move China's economy toward high-quality development, how to promote Chinese-style modernization, and how to build a new growth pattern.”

The impact of the three-year Covid-19 pandemic, difficulties in transformation and upgrading, and the challenges brought to the Chinese economy by the changing global environment should not be underestimated, Zhang added. Not enough effective demand is the major contradiction in China's economy at the moment, he said.

In addition, heavy local government debt and weak infrastructure investment will bring new challenges to the economy, Zhang pointed out. Weakening global demand, geopolitics, and the transformation of Chinese trade companies have all affected imports and exports, he added.

In the medium- and long-term, the shrinking labor force resulting from the declining birth rate will be a more serious problem for China, according to Eswar Prasad, Tolani senior professor of trade policy at Cornell University.

Zhang said the core of China's future development lies in productivity growth, digital technology, and the green and new energy revolutions. 

Global economic growth will slow further this year, possibly to 3.1 percent from 3.4 percent last year, and remain at 3.1 percent next year too, a report released at the IFF meeting predicted. China’s economy is expected to expand by 5.2 percent in 2023 and 5 percent in 2024, it said.

Editor: Martin Kadiev