Many media outlets have recently provided their forecasts for the global economic outlook in 2024, and some of these predictions are notably pessimistic. Given the escalating Russia-Ukraine conflict and the political tensions stemming from US election, there is a growing interest in how to assess the economic conditions of both China and the world as a whole this year.

China's National Bureau of Statistics said on January 17 that China's economic growth of 5.2 percent in 2023 reflects positive improvements in the country's economic fundamentals. The steady improvement in supply and demand, active progress in transformation and upgrading, stable employment prices and effective measures to secure people's livelihoods have contributed to the solid advancement of high-quality development. As a result, China has successfully achieved its main expected goals.

The above statement reflects an objective viewpoint. However, it is worth noting that some individuals may hold concerns regarding the Chinese economy, citing issues such as an overabundance of products, excessive production capacity and excessive investment.

It is natural for different perspectives to exist when observing China's economic development in 2024. While it is important to raise specific issues and seek solutions for challenges, it is not productive to blindly criticize and undermine confidence and expectations. Constructive discussions and collaborations are key to promoting a positive economic outlook. In my opinion, China's economic growth is underpinned by robust and stable fundamentals.

It is important to look into the observations and analyses amongst serious foreign media and academic circles.

First, the logic of the Phillips Curve, which reflects the correlation between labor and employment markets, has disappeared. Under the past macro management, if an expansionary monetary and fiscal policy combination was implemented and prices rose above the inflation threshold, we would definitely see an increase in employment by a certain percentage between 0 and 1. Over the past years, the US and some large economies have experienced surging inflation during multi-year downturns, but employment statistics have shown little relation with the traditional Phillips Curve.

Second, the Cobb-Douglas production function curve has disappeared. The Cobb-Douglas function is an economic and technical relationship with increasing marginal costs and decreasing marginal returns. A "ballistic" curve line of economy will always be balanced at a suitable place with a downward demand curve. However, in the past 15 years, observations have found that violation of the Cobb-Douglas function curve relationship has continued to dominate economic development trends.

I visited Douyin's headquarters at the end of January. The minimum sales of one three-person online sales team - an anchor, an anchor assistant and a director - was about 90,000 yuan ($12,512), and the average sales was 980,000 yuan (the top teams are higher). This is the actual sales volume for a 3-hour work unit. I counted and found that there are more than 4,300 anchor teams, and the sales in one day are estimated to exceed 1 billion yuan.

In the era of traditional manufacturing, the cost of the circulation is normally higher than that of the production. These young people, with an average age of 26, use their platform economic technology to cut the costs of the circulation. This is not only true in China, but also in the US today. The return on investment, youthfulness of human resources and market coverage of this sales model are completely new. Their return on investment is not labor-intensive or technology-intensive, nor is it blue ocean return, but exponential return. No wonder the Cobb-Douglas function curve has disappeared.

Third, the currency holding relationship in the "Baumol-Tobin" model has disappeared too. The money market equilibrium does not move much due to the speed of money issuance.

When these three changes are combined, we will find that the labor and employment market is unbalanced, the production and sales commodity market is unbalanced, and the currency issuance and currency holding market is unbalanced. If we analyze it in terms of total demand management and total supply management corresponding to the general equilibrium theory, we may reach a frustrating conclusion.

However, one cannot only look at the negative side of the issue. Why has the overall equilibrium process relationship of the economy disappeared? The key is that in the past 40 years, especially in the past 15 years, the networked sharing economy supported by digital technology has continuously changed the traditional dynamics of the overall economy not only the job market, but also the product market and the currency market.

China's large workshop economy is at the forefront of the world. In terms of the transition from the large workshop economy to the digital economy, the networked sharing economy supported by digital technology, China and the US are both in leading group. In terms of the digital technology, China is ahead of the US in the application of cutting-edge digital innovation technologies, especially in the construction of consumer platforms.

Why? In terms of mobile internet infrastructure required for the Internet of Thing (IoT), China is significantly ahead of the US. China's assembly, supply and direct-to-consumer processes are more flexible, smooth and convenient than those in the US. In terms of Industry 2.0, 3.0 and 4.0, although China is only slightly behind, due to its large scale, the overall construction has been completed, China has performed well in the iterative process of six generations of digital enterprises.

Moreover, China's younger generations have more innovative thinking and abilities. Although there will inevitably be various structural adjustments and frictions during the growth process, the shift from large workshops, assembly lines and modular production to networked sharing economic production supported by digital technology, and toward the second growth of the digital economy is approaching. The time for the transition to the smart economy is getting closer. China's economic growth in 2024, despite facing many challenges, is still optimistic and promising.

The author is an economist and professor at Peking University. bizopinion@globaltimes.com.cn