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Consumption, investment drive Chinese economy in H1

The Chinese economy in the first half of this year featured economic structure optimization and transformation. And experts said both consumption and investment performances have driven up China’s economy.

“Economic development in China is all about one word — stability. The stability is reflected in the CPI growth, and in the PPI growth. But speaking overall, the economic baseline is steady,” said Cai Junyi, chief analyst at the Shanghai Securities.

The demand structure showed that consumption contributed more than 80 percent of the economic growth — “a sign of better economic condition,” according to Su Jian, a professor at School of Economics at Peking University.

“Consumption becomes a larger contribution to the economy. Service consumption, notably high-end service consumption, such as tourism, education, and medicare will lead the growth of Chinese economy,” Su said.

And Zhao Changwen, general director of the Department of Industrial Economy, part of the Development Research Center at the State Council, commented, “New growth engine is growing. One of that is consumption and its contribution to the economy is increasing steadily.”

Moreover, real estate investment was a major driver of the Chinese economy, which accelerated to 7.9 percent in June from a year earlier, compared with a 7.3 percent expansion in May. And the area of property sold grew 16.1 percent in the first half of 2017 year-on-year.

“Investment and consumption are the driving force of the economic growth in the first half this year,” Su noted.

However, the effects of a cooling property market are yet to kick in, as buyer demand appeared to be more resilient than expected.

“We’ve seen that real estate investment is declining from a high in May. If the tight policies continue, investments in property-related industries can be expected to fall in the second half of this year. But of course there are also stable sectors such as exports,” said Li Liuyang, chief analyst at China Merchants Bank.

A recent survey by People’s Bank of China (PBOC) showed that 31.2 percent of households expect housing prices to rise in the third quarter, while 46.1 percent believe the prices will remain unchanged. And experts said a “long-term mechanism” in the property market is necessary, aiming to avoid potential risks.

“We need to establish a long-term mechanism in the real estate market. So the short-term risks won’t add up to hit the economy badly in the end,” Zhao suggested.