Strong growth defies doomsayers’ expectations

Despite a slight slowdown in the second quarter, China’s growth has remained on track in the first half of this year, reaching an expectationbeating 6.8 percent year-on-year. China’s economic resilience is highlighted by the fact that growth has remained between 6.7 percent and 6.9 percent for 12 consecutive quarters. Considering it has been necessary for the authorities to take stringent regulatory measures and keep a prudent monetary policy stance to control financial risks, the 6.7 percent GDP growth in the second quarter is noteworthy.

Admittedly, the growth rate is lower compared with the country’s historical highs, but those rates were of their times and were never going to be sustainable. Despite its relatively slower growth nowadays, China is still one of the fastest-growing major economies in the world and a major contributor to the global economy.

The performance of sectors such as agriculture, services, emerging industries and retail, as well as people’s growing incomes and the falling unemployment rate in major cities support the assessment that China’s economic growth remains robust. And so far, at least, there are no apparent signs of any significant economic slowdown despite the potential impact of the China-US trade frictions.

However, policymakers are likely to face more severe challenges in the second half of this year. The further contraction of liquidity, the possible easing of the property market, and the surfacing of the impact on the export side if the China-US trade frictions continue may combine to bring more growth challenges to policymakers.

Therefore, the healthy GDP growth achieved in the first half of the year, which has been higher than the expectations of many China observers, should not mislead decision-makers.

Judging by the comments of the National Bureau of Statistics spokesperson Mao Shengyong on Monday, who observed that “external uncertainties are on the rise while the domestic economic restructuring is at a crucial stage”, the authorities are well aware of the challenges that lie ahead.

To tackle those challenges, China needs to accelerate its supplyside structural reform to improve the capacity of the corporate sector to survive in the upcoming hard times. It also needs to help its exporters to divert their shipments to countries other than the United States, whose increases in tariffs targeted at Chinese goods are set to reduce its imports from China.

Further progress in restructuring to improve economic quality and efficiency will help the country weather any headwinds it may encounter.