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July 22, 2019

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Navigating headwinds, China’s economy remains stable

China’s economic growth remained generally steady in the first half of the year, lifting confidence to reach the country’s annual growth target despite complex challenges.

The nation’s gross domestic product expanded 6.3 percent year on year to about 45.09 trillion yuan (US$6.6 trillion), according to the National Bureau of Statistics last week. The growth was in line with the government’s target of 6 to 6.5 percent for 2019.

In the second quarter, GDP rose 6.2 percent year on year, retreating from the first quarter’s 6.4-percent increase to become the slowest quarterly growth rate since 1992.

Though pulling back from the large rises in past decades, China’s economic growth remains one of the world’s strongest, said Mao Shengyong, a spokesman with the statistics bureau.

A commentary released by Xinhua news agency said that while the headline data offered a broad measure of growth, simply dwelling on the figure would be understating the challenges and hardships the country had undergone to keep the economy on the right track.

It said the trade war between China and the US had not only posed a negative impact on both countries, but had also harmed the world economy, with protectionism more serious than before throughout the global market.

Domestically, downward pressures still loomed large and policymakers were tasked with fostering new growth drivers, containing debt levels, stabilizing trade and avoiding drastic fluctuations in the financial market.

Hard-won growth

In such unfavorable circumstances, the delivery of 6.3-percent growth was “hard-won,” according to Xinhua’s commentary.

Mao said that China’s economic growth had shifted focus to the promotion of structural adjustment, transformation and upgrading, instead of simply pursuing a fast pace.

“There is no deliberate relaxation of the policy in order to maintain the speed, so the current growth rate is relatively solid, sustainable, and of high quality,” he said.

The services sector expanded 7 percent year on year in the first half, outpacing a 3-percent increase in agricultural sector and a 5.8-percent rise in manufacturing. The output of the services sector accounted for 54.9 percent of total GDP in the first half, 0.5 percentage points higher than the same period of last year, indicating optimization of the industrial structure.

Consumption continued to play a major role in driving economic growth. “The contribution from the consumption sector to overall economic growth reached 60.1 percent in January-June period, indicating a continuous consumption upgrade,” Mao said.

The regional structure is also being optimized, as innovation and technological progress are being accelerated in eastern coastal areas while the central region has posted faster growth.

In spite of the friction with the United States, China’s foreign trade totaled 14.67 trillion yuan, an increase of 3.9 percent year on year and 0.2 percentage points faster than the pace in the first quarter. Exports posted a 6.1-percent annual rise to 7.95 trillion yuan in the first half, while imports were up 1.4 percent to 6.72 trillion yuan.

The country’s trade surplus widened by 41.6 percent from a year earlier to over 1.23 trillion yuan, which can be attributed to the fact that “its foreign trade markets has become increasingly diverse,” according to Xinhua.

Since 2013, the Belt and Road Initiative has made trade among countries along the route more vibrant.

Meanwhile, albeit there are doubts about the sustainability of some rebounding figures in June, such as the faster growth in industrial investment, consumption and the services sector, economists remain optimistic.

For example, retail sales of consumer goods rose 9.8 percent in June, up 1.2 percent from May, with better-than-expected auto sales a major driving force. This can be mainly attributed to the switch to stricter emission standards from July 1 in some regions.

Some car dealers had promotions to clear out models built in accordance with the previous standards in June. There were also promotions in a bid to boost their half-year figures.

The bureau cited a number of favorable factors.

For example, the vitality of the market had been continuously stimulated, and a series of counter-cyclical adjustment policies were gradually being implemented.

The positive effects of these policies will be more obvious in the second half of the year, Mao said.

There is no denying that downward pressure still looms, according to Xinhua, but efforts to rebalance the economy and remove structural and institutional barriers will continue.

“With the maturing Chinese economy and its increasing interactions with the world, uncertainties and troubles are inevitable. But with clear direction, the world can count on China to be a responsible mainstay for sustained growth for many years to come,” it said.


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