GDP data show continued expansion
China’s economy expanded at a faster-than-expected 6.9 percent year-on-year in the second quarter and economists said the trend of stable growth is set to continue into the second half of 2017, paving the way for the country to strengthen reforms.
The economy, as measured by the gross domestic product, was unchanged from the first quarter and has remained in the 6.7 to 6.9 percent range for eight consecutive months, according to data released on Monday by the National Bureau of Statistics. GDP growth accelerated to 1.7 percent in the second quarter, up from 1.3 percent in the first quarter.
Key indicators, such as industrial output, retail sales and fixed-asset investment, all were at high levels in the second quarter, the NBS said. Real estate investment, a key driving force of growth, increased by 8.5 percent in the first half of this year, slightly down from the first quarter. “Real estate investment, together with infrastructure investment, remained brisk and contributed to the strong growth in the second quarter,” said Yu Yongding, an economist with the Chinese Academy of Social Sciences.
The economic structure also has improved, according to NBS data. For example, investment in high-tech manufacturing industries grew by 21.5 percent year-on-year in the first half of this year, 12.9 percentage points higher than overall investment growth.
The crucial job market, meanwhile, remained stable, with 7.35 million jobs created in urban areas in the first half of this year, 180,000 more than a year earlier, according to the NBS.
Looking ahead, China’s economic growth may ease moderately, mainly due to slowing growth expected in real estate investment thanks to the country’s tightening of price control policies, but it faces much less pressure to grow, analysts said.
“The economy may continue to fluctuate a little bit, but there would not be sharp declines, and China does not face any risk of a hard landing,” said Yu of CASS, who also is former member of the monetary policy committee of the People’s Bank of China, the central bank.
China’s whole-year growth this year may reach 6.7 percent, meaning it will meet its target of “around 6.5 percent”, according to forecasts by some institutions, such as the China Center for International Economic Exchanges and investment bank ICBC International.
“China’s pressure from growth stabilization has eased greatly and it will pay way for its macroeconomic maneuvers to upgrade its economic structure and contain risks,” said Cheng Shi, chief economist at ICBC International.
Early this year, China watchers expressed concerns that the country’s economy might start to weaken in the second quarter. However, the latest data from the National Bureau of Statistics show such concerns were unfounded, and the world’s second-largest economy remains resilient. The economy expanded by 6.9 percent in the second quarter from a year earlier, the same as in the first quarter, according to the figures released by the NBS on Monday. Even more encouraging, key indicators, such as industrial output and consumption, reveal that improvements are being made in adjusting the country’s economic structure.
Investment in high-tech industries, for example, increased by 21.5 percent, 12.9 percentage points higher than overall investment growth, while retail sales of consumer goods grew 10.4 percent year-on-year, up from 10 percent in the first quarter. And the service sector, which already accounts for 54.1 percent of the overall economy, expanded 7.7 percent year-on-year in the first half of the year. According to the NBS, domestic consumption now accounts for 63.4 percent of GDP growth, which highlights the progress China is making in its bid to make innovation and domestic demand the drivers of economic growth.
Considering that this performance has been achieved against the backdrop of efforts to reduce excess production capacity and cut corporate debt levels, the figures are not only impressive, but also suggest the country has managed to successfully strike a balance in its bid to promote economic growth and restructuring.
Looking to the future, China will continue to press ahead with its tasks of reducing excessive production capacity, cutting real estate stocks, and lowering corporate debt levels, while further strengthening its environmental protection and water conservancy efforts.
Although policymakers will need to remain alert to the possibility of slower growth in the third quarter, there can be little doubt that the country is on course to achieve its pre-set GDP growth target of “around 6.5 percent” for the year.
With its growth target attainable, and the economy maintaining stable and coordinated development, the leadership has more room to push ahead with economic restructuring and reforms. Financial reform, for example, is on the cards, after the country consolidated its financial regulatory power at the newly-concluded National Financial Work Conference, which ended on Saturday.
And further headway in advancing the necessary reforms will in turn make the Chinese economy more efficient, competitive and sustainable in the coming years.