Data released on July 15 showed a GDP growth rate of 7 percent for the second quarter of this year as well as positive signs in key indicators, including fixed-asset investment, exports and fiscal revenue.
On the same day, the executive meeting of the State Council, chaired by Premier Li Keqiang, decided six policies and measures to facilitate the stable growth of imports and exports, and emphasized the importance of boosting the engine of development through expanding opening up.
While some observers believe that such efforts are aimed at increasing the contribution of exports to the economy to ensure this year’s growth target, Fan Jianping, chief economist at the State Information Center, a think tank affiliated to the National Development and Reform Commission, said it is more of the medium- and long-term measures that are ensuring the new situation of China’s opening up.
“The contribution of consumption to the economy seems to be higher because of the declining contribution of investment for economic growth,” Fan said.
According to data from the General Administration of Customs, China’s exports rose 2.1 percent in June from a year earlier, ending a three-month losing streak and the trade surplus jumped by 45 percent to 284.2 billion yuan in the same period.
“Given the expanded trade surplus, the contribution of foreign trade to economic growth in the first half of the year should be higher than the same period last year,” Fan said.
He also said that the State Council’s decision on key measures to stabilize foreign trade growth should have given more focus to long-term interests.
“Since the piloting of free trade zones started, the country needs more open systems and policies to realize the new round of opening up,” he said.
The executive meeting on July 15 mentioned that the new round of higher-level opening up offers significant support for improving the quality and efficiency of the economy.
It asked for more efforts to promote the facilitation of foreign trade, improve the environment for businesses, and help to alleviate the burden on foreign trade enterprises.
Fan also noticed that the meeting said that China will keep the value of the yuan within a reasonable range and reach equilibrium, facilitate the RMB settlement in cross-border trade, and help enterprises to avoid exchange rate risks.
“China will not seek to keep its advantages by relying on the depreciation of the RMB, it will, instead, turn to scientific innovation, production cost reduction as well as increase the added value of products,” he said.
Xu Hongcai, an economist at China Center for International Economic Exchanges, a Beijing-based think tank, believes that the reform and opening up of China’s service industry, especially the financial sector are still challenging.
“The renminbi is still not a (completely) international currency yet, and this does not suit China’s status as a major economy,” Xu said.
As for China’s performance in foreign trade in the next half year, Xu said the more than 10 percent of economic growth since China joined the World Trade Organization has been “a thing of the past”, but a new favorable situation has unfolded. That is, the Belt and Road Initiative has attracted a large amount of foreign capital.
Moreover, as the outbound investment will also boost the export of commodities, international cooperation on production capacity might be a new opportunity.
Fan also said that the narrowing decline in imports is probably due to preparing raw materials for the exports in the processing trade in the second half year.
He predicted better performance of foreign trade in the next half year, as the Greek debt crisis has been solved and the United States still shows a momentum in economic recovery.
“Additionally, with the new competitive advantages of foreign trade as well as its transformation and upgrading, it is likely that China’s foreign trade volume will grow in the second half of the year or in the next two years, even rapidly,” Xu said.