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First half sees sustainable, high-quality growth

Updated: Aug 4,2015 5:06 PM’s Daily

The Chinese economy will not experience a recession or crisis, even if China’s gross domestic product (GDP) grew 7 percent year-on-year in the first half of 2015, an expert was quoted as saying in the People’s Daily.

The 7-percent growth was actually a medium-high rate of growth that was based on solid economic performance, and it focused more on quality and sustainable growth, said Chen Dongqi, executive vice-president of the Academy of Macroeconomic Research affiliated to the National Development and Research Commission.

Medium-high rate of growth

The 7-percent growth was not the lowest growth rate since China started its reform and opening-up policy. Though 3 percentage points lower than the average 10-percent growth in the first 36 years of the policy, it was still 3 percentage points higher than the growth rates in 1989 and 1990, which were less than 4 percent, said Chen.

In addition, as the size of the economy in the first half of 2015 was almost 60 times that of 15 years ago, achieving a growth even by one percentage point would require much more effort than before, he said.

The 7-percent growth was lower than that of India, but it still dwarfed the performance of other major economies in the world, according to IMF estimates in April and July.

Growth with solid basis

Monthly economic indicators showed that China’s economy began to edge up from April.

Looking at the supply side, the industry and service sectors, accounting for almost 90 percent of the GDP, crawled up from previous declines, which helped to boost the economy.

Concerning the demand side, indicators of consumption, investment and trade all showed signs of improvement.

Though growth rate of exports came to a mere 1 percent, the figure turned positive during the second quarter, as it rose to 8.8 percent in June compared to minus 15 percent in March. Meanwhile, as imports growth shrank to minus 15.5 percent in the first half of the year compared to the same period last year, trade surplus in goods and services amounted to $263.25 billion, enabling the net exports to contribute more to economic growth.

From the perspective of regional growth, provinces in the Yangtze River Delta and Pearl River Delta, which contribute a large share to the country’s GDP, boasted faster growth than the country’s average in the first half.

The central region, excluding Shanxi province, saw its economy grow by 8.5 percent year-on-year. The top five provinces in terms of GDP — Guangdong, Jiangsu, Shandong, Zhejiang, and Henan — all witnessed a faster growth in the second quarter, compared with the first quarter.

Quality growth

China optimized its economic structure in the first half, and caused the economy to grow to a higher level, Chen said.

The country has accelerated the development of the modern services sector and the upgrading of the manufacturing sector to middle-high level — and it boosted industries related to energy saving and emission cuts.

Additionally, the economic growth benefited more people by improving their quality of life. China created 7.18 million urban jobs in the first half, achieving 71.8 percent of its full-year target. During the same period, disposable income per capita increased by 7.6 percent year-on-year, 0.6 percentage point higher than the GDP growth.

Of particular significance, disposable income per capita in rural regions increased by 8.3 percent year-on-year.

As farmers with low-and-medium income are in the marginal propensity to consume category, which means spending power rises with increased income, the increased consumption will benefit the economy.

Sustainable growth

The 7-percent growth in the first half is a sustainable growth rate, Chen said, and it leaves much room for improvement.

China’s reform and opening-up policy injected vigor into the economy. The government launched a series of measures to streamline administrative approvals and delegate powers, and these reforms stimulated market vibrancy, he also said.

Meanwhile, the Belt and Road Initiative helped to expand cooperation in production capacity and equipment manufacturing. As the government initiated more free trade zones, China is gradually opening up its business, financial and capital markets, which will facilitate the internationalization of the RMB, as well as investment and trade, Chen added.

China is promoting mass innovation and entrepreneurship, and a total of 2 million new enterprises were established in the first half of the year, up 20 percent year-on-year, which equaled 11,000 new enterprises every day.

Chen said that the transformation and upgrading of the economy released impetus to drive the 7-percent growth. And the driving forces are urbanization, the combination of the development in the era of post-industrialization and new-model of industrialization, and better trained talent.

The sustainable growth also came as a result of the government’s macro-control policies, Chen also said. China launched a series of policies to stabilize investment, expand consumption and boost exports in the second half of 2014 and the first half of 2015. Meanwhile, new measures released since July this year will reveal their effects gradually — and the government has sufficient economic tools for future development.