Right on Track
China’s economic state has always been closely watched by the international community. Now, when China and the United States are conducting rounds of trade negotiations, many are concerned about the possible slowdown of the Chinese economy. Since China contributed nearly 30 percent to global growth in 2018, if its economy slows down, it will affect the overall growth momentum of the world economy.
Nevertheless, such concerns are unnecessary as the fundamentals of the Chinese economy remain unchanged and it is in good shape.
The development of new growth models has injected vitality into the economy. Over the past decades of double-digit growth, the Chinese economy has mostly relied on investment and export at the expense of the environment. The Chinese Government has tried to change this unsustainable growth model over the past decade and has succeeded. National economic data in 2018 showed that consumption has become the primary growth driver, contributing 76.2 percent to economic growth, an increase of 18.6 percentage points over the previous year. Since the Chinese Government has taken multiple measures to boost consumption, it is expected to play a more important role in the economy in 2019.
The continual increase in residents’ income will further promote the sustained growth of consumption. In 2018, the country’s per-capita disposable income increased 6.5 percent, faster than the 6.1-percent growth rate of per-capita GDP. As China pushes ahead with measures to fight poverty and increase employment, the growth momentum of citizens’ income will continue in 2019 and further boost consumption.
China’s huge market, which is still growing, has provided ample room for economic growth. The country’s middle-income group has surpassed 400 million and become the main contributor to domestic demand. In 2018, total retail sales of consumer goods surpassed 38 trillion yuan ($5.6 trillion), which is more than many countries’ GDP. In addition, China’s imports exceeded 14 trillion yuan ($2.05 trillion) in 2018, up 12.9 percent. The Chinese market’s demand for foreign products will continue to grow in 2019 following the launching of more measures to expand imports.
The furthering of reform and opening up has injected new impetus into economic growth. As China expands its opening up, its business environment has consistently improved and the attractiveness for foreign investment increased. In spite of the sharp decline of cross-border investment throughout the world, China utilized foreign capital worth $135 billion in 2018, up 3 percent year on year, which showed international investors’ confidence in and bright prospects for the Chinese economy.