Slow­but­steady

China’s econ­omy looks poised to main­tain medium-to­high growth

ChinAfrica - - Business - By Zhang Liqun

China’s econ­omy grew by 6.7 per­cent in 2016, a sig­nif­i­cant de­crease com­pared to 10.6 per­cent in 2010. How­ever, in the first half of this year, its eco­nomic growth has shown signs of ris­ing, hit­ting 6.9 per­cent year on year, the same rate as in the first and se­cond quar­ters, ac­cord­ing to fig­ures re­leased by Na­tional Bureau of Statis­tics on July 17. In fact, re­cent read­ings from a num­ber of in­di­ca­tors tend to in­di­cate that short-term fluc­tu­a­tions that have oc­curred as China’s econ­omy bot­toms out are com­ing to an end.

The value added of ma­jor in­dus­trial en­ter­prises, an im­por­tant eco­nomic in­di­ca­tor, ex­panded 6.9 per­cent year on year in the first half, 0.1 per­cent­age point higher than that of the first quar­ter. The ser­vice sec­tor has con­tin­ued its growth, with the in­dex of ser­vices pro­duc­tion in­creas­ing 8.3 per­cent year on year. The pur­chas­ing man­agers’ in­dex rose to 51.7 in June, up from 51.2 in May, mark­ing the 11th con­sec­u­tive month of ex­pan­sion.

By 2016, the share of China’s res­i­den­tial pop­u­la­tion liv­ing in ur­ban ar­eas had risen to 57.35 per­cent. Mean­while, the pro­por­tion of ur­ban house­hold reg­is­tra­tion hold­ers ac­counted for 41.2 per­cent of the pop­u­la­tion. Com­pared with the res­i­den­tial pop­u­la­tion, the size of China’s “float­ing pop­u­la­tion” is huge, giv­ing strong mo­men­tum to ur­ban­iza­tion.

In the process of push­ing for a new type of ur­ban­iza­tion, China will speed up its in­fra­struc­ture devel­op­ment through ur­ban ag­glom­er­a­tions and pub­lic ser­vice shar­ing.

The pro­mo­tion of a new type of ur­ban­iza­tion is ex­pected to im­prove the real es­tate devel­op­ment en­vi­ron­ment, and pro­vide con­tin­u­ous sup­port for de­mand. As a re­sult of im­proved pop­u­lar­ity, the hous­ing mar­ket in a num­ber of se­cond-tier cities will ben­e­fit from stronger de­mand. Th­ese ur­ban growth poles, in turn, are ex­pected to play a strong ra­di­at­ing role in boost­ing the devel­op­ment of sur­round­ing third and fourth-tier cities.

In this con­text, real es­tate in­vest­ment has staged a re­bound since last year. In­vest­ment in real es­tate devel­op­ment grew 6.9 per­cent year on year in 2016, which is 5.9 per­cent­age points faster than a year ear­lier. It grew 8.5 per­cent in the first half of this year.

More­over, in­fra­struc­ture in­vest­ment is ex­pected to main­tain rel­a­tively strong growth. The num­ber of con­struc­tion projects have been on the rise as China pro­motes new-type ur­ban­iza­tion and the Belt and Road Ini­tia­tive. Be­sides, some lo­cal gov­ern­ments have gained rel­e­vant ex­pe­ri­ence in is­su­ing bonds and us­ing pub­lic-pri­vate part­ner­ships for fundrais­ing.

As a re­sult, in­fra­struc­ture in­vest­ment has shifted from a model driven by high growth tar­gets, to a model driven by an in­crease in con­struc­tion projects and im­proved fund­ing.

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