For the global economy that is teetering on the brink of its slowest annual growth since the 2008 global financial crisis, China’s 7 percent economic growth in the first half of this year can hardly be satisfactory.
Nevertheless, for the world’s second-largest economy that is undergoing crucial structural reforms, such a hard-won growth rate is actually more encouraging than might meet the eye.
Latest statistics show that China’s GDP reached 29.7 trillion yuan ($4.9 trillion), up 7 percent year-on-year in the first six months of this year.
That means, after a series of bold government macroeconomic moves and structural reforms, the Chinese economy has seemingly bottomed out by expanding 7 percent in the second quarter of 2015, the same as that in the first quarter.
When China’s economic growth decelerated from 10.6 percent in 2010 to 7.4 percent in 2014, the slowest pace since 1990, few observers expected that the country would be able to stop the slowdown anytime soon, especially when economic growth further dipped to 7 percent in the first quarter.
Now, with the many pro-growth policies adopted by the government in the first half of the year set to take effect, it looks more than likely that the Chinese economy will expand faster in the second half because of robust domestic consumption.
The reason why the Chinese economy has beaten the market forecast of below-7-percent growth for the second quarter has surely something to do with the fact that the country’s exports rebounded in June.
But the fundamental driving force is no longer the fast export growth that worked so well to maintain China’s rise as a global manufacturing powerhouse over the past three decades.
Instead, it is the steady increase in domestic consumption that is propelling China’s moderate but more sustainable growth.
Consumption accounted for 51.2 percent of GDP growth in 2014. In the first half of this year it has contributed 60 percent.
Such a rapid rise in consumption-led growth results from both the continuous rise in people’s incomes and the government’s unremitting efforts to improve the domestic environment to encourage consumers to open their wallets.
Given that consumption plays an even bigger role in boosting growth in many developed countries than in China today, it is reasonable to expect more government efforts to tap into this source of growth.
If Chinese consumers are better served, both the Chinese economy and the global economy will benefit tremendously even if the country’s economic growth rate is not as breathtaking as it used to be.
The story is an editorial by China Daily.