Analysts expect positive factors to boost growth

Appropriate policies cited as Chinese economy remains stable on the whole

For China watchers, the country’s easing GDP growth in the second quarter constitutes evidence of a renewed downward cycle for the world’s second-largest economy. But considering the headwinds of slowing global economic growth, Sino-US trade friction and domestic economic restructuring, there is no justification for pessimism about China’s economic performance, economists said.

More important, some positive signs, such as rising manufacturing investment, have emerged, which will help bolster growth in the second half of the year, the economists said.

China’s GDP growth was 6.2 percent year-on-year in the second quarter, down from 6.4 percent in the first quarter. It was 6.3 percent in the first half of the year.

The figures are still well within the whole-year GDP growth target of between 6 and 6.5 percent set for this year.

“The Chinese economy on the whole remains stable, the achievement of which is no easy task,” said Chen Changsheng, director-general of the Department of Macroeconomic Research of the State Council’s Development Research Center.

Analysts said the hard-won results are attributable to the appropriate policies of the authorities.

“The government has adopted targeted policies to support the economy, through tax reductions and macro prudential measures to support private sector demand and through improvements in the business climate on the supply side. We think this is appropriate,” said Martin Raiser, the World Bank’s country director for China.

“We have basically achieved the target of ‘six stabilizes’,” Chen of the DRC said, referring to the central government’s goal of stabilizing employment, finance, foreign trade, foreign investment, domestic investment and market expectations.

Data from the National Bureau of Statistics shows that China’s urban surveyed unemployment rate was 5.1 percent in June, compared with 5 percent in May. The surveyed jobless rate for those between the ages of 25 and 49 was 4.6 percent in the same month — 0.5 percentage point lower than the overall figure.

Foreign investment growth, which came in at 7.2 percent for the first half of this year, was also impressive against the backdrop of rising protectionism and easing global cross-border investment growth.

Other indicators, such as money supply and fixed-asset investment, also stood at normal levels and have not seen major downturns.

“(Domestic) enterprises have

become more easygoing after having priced in the uncertainties caused by the Sino-US disputes,” said Chen, adding that his team conducted surveys of 20,000 small companies and 5,000 large and mediumsized enterprises recently. Most of the respondents said they had become more composed toward the impact of the trade friction between the two major powers, Chen said.

Another positive sign comes from financing for small businesses.

In the first half of the year, China’s short-term lending increased 1.47 trillion yuan ($213.7 billion), and commercial paper-based financing increased 1.18 trillion yuan, according to central bank data.

Those are the main financing channels for small businesses, and their increases show that small businesses have had easier access to financing, said Zhu Hongming, an economist with the Financial Research Department of the Development Research Center.

The improving fixed-asset investment growth, which is a major contributor to overall economic growth, also indicates that overall economic soundness is on the rise.

FAI growth rose 5.8 percent yearon-year in the first six months, accelerating from 5.6 percent in the first five months, according to the NBS.

Manufacturing fixed-asset investment expanded 3 percent year-onyear in the first half of the year, compared with 2.7 percent in the first five months and 2.5 percent in the January-April period.

“Manufacturing investment tends to decrease as the economy cools off, and its growth had rebounded for two consecutive months, indicating the corporate sector has become more confident in the economic prospects,” said Xu Zhaoyuan, an economist with the Industrial Economic Research Department of the DRC.

Since the country is expected to further improve its business environment and cut taxes and fees, manufacturing investment growth may continue to pick up in the second half of the year, he said, adding that the whole-year growth of manufacturing investment may be around 4 percent.

China has planned to cut taxes and fees totaling 2 trillion yuan this year, and the implementing of the move has benefited a large number of businesses.

Liang Haiming, chairman of the Beijing-based China Silk Road iValley Research Institute, said, “If the economy continues to weaken in the coming months, it is expected that the country will roll out countercyclical policies, such as more tax and fee reduction, to help small and micro businesses and expand domestic demand.”

As a result, the country’s GDP growth may be kept at between 6 and 6.5 percent this year, he added. Chen Jia contributed to this story.