China's economy sees steady growth with more high-quality driving forces

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China's National Bureau of Statistics said on Monday that the country's GDP expanded 6.3 percent year-on-year in the first six months to over 45 trillion yuan (about 6.6 trillion U.S. dollars). The result was hard fought against the backdrop of global unilateralist and protectionist headwinds. The stable performance was achieved with more substantive progress.

Though the 6.3 percent growth for the first half of the year is a little lower than the 6.4 percent made in the first quarter, meaning China’s economic growth slowed in the second quarter, it was in line with slowing global growth. The growth remains however within the government's annual target of 6-6.5 percent set for 2019 as the country started shifting gears towards high-quality development. Major indicators such as the unemployment rate, consumer price index and producer price index remained stable. The growth of per capita disposable income was 6.5 percent, 20 basis points higher than GDP growth during the period.

A worker on a wheel loader assembly line at a machinery manufacturing plant in Weifang, Shandong Province, China, July 15, 2019. [Photo: IC]

More importantly, China’s economic restructuring continued in the first half. In terms of the industrial structure, the output of the service sector, which accounted for 54.9 percent of total GDP, rose 7 percent year-on-year, outpacing a 3 percent increase in primary industry and a 5.8 percent rise in secondary industry. The output for high-tech manufacturing rose by 9 percent, 300 basis points faster than overall industrial growth.

On the demand side, the role of consumption was further consolidated as it contributed 60.1 percent to GDP growth in the first half. And regional structure has improved thanks to the coordinated advancement in regional development strategies. The aggregate industrial output of central regions, for instance, increased by 8.4 percent, 350 basis points faster than that in the eastern region. In addition, green development was solidly promoted as the country’s energy consumption per unit of GDP decreased 2.7 percent. Taken together, these provide further evidence that China’s economic growth is gaining more momentum with high-quality driving forces.

The achievements were made thanks to the joint efforts of the Chinese government and enterprises. On the one hand, the government has adhered to a proactive fiscal policy and a prudent monetary policy. Measures such as a tax and fee reduction of 2 trillion yuan (some 294 billion US dollars) for this year have helped ensure that the economy operates within a reasonable range.

At the same time, the market-oriented reform of China's state-owned enterprises has taken a critical step, where the strategic restructuring of SOEs continues. Private enterprises have continued to enter new areas and have transformed traditional sectors with new technologies. China's series of measures to further open its market have won recognition from foreign investors. In the first six months, foreign investment in the country increased by 7.2 percent year-on-year, which indicates the confidence the international community has in the Chinese economy.

The performance of the Chinese economy in the first half provides further evidence that it has strong resilience and capacity to tolerate risk. The fundamentals for healthy and stable economic development have not changed, with the overall momentum for long-term steady development likewise unchanged. The world has every reason to believe that the Chinese economy is capable of achieving its development goals this year.