China's economic 'mid-year report' reveals two major trends

By Wang Enbo

(CNS) -- China's economic "mid-year report" was unveiled on Monday, painting a picture of quantitative growth and qualitative improvement, which shows that the country’s economy entered the second half of the year with overall stability and a trajectory of progress. 

The four major macroeconomic indicators-- growth, employment, inflation, and international balance of payments -- serve as a framework to assess economic performance.

"Stability" can be seen from statistical figures that have increased step by step in these areas.

In the first half of the year, China's GDP reached 61.7 trillion yuan (about $8.5 trillion), with a year-on-year increase of 5.0 percent. On a quarter-on-quarter basis, after seasonal adjustment, the GDP growth in the second quarter increased by 0.7 percent, marking the eighth consecutive quarter of positive growth.

A spokesperson for the National Bureau of Statistics said that for an economy of China's size, achieving a medium-to-high growth of around 5 percent is commendable.

Despite lingering economic aggregate and structural pressures, economic growth, especially the continued recovery of labor-intensive service industries, has driven stable employment expansion. In the first half of the year, China's average surveyed urban unemployment rate stood at 5.1 percent, a decrease of 0.2 percentage points from the same period last year.

Furthermore, as the economy continues to recover and employment income stabilizes, the market supply-demand relationship improves, leading to a moderate rebound in price level. The Consumer Price Index (CPI) for the first half of the year edged up by 0.1 percent year-on-year, with a 0.3 percent increase in the second quarter. The core CPI, which excludes volatile food and energy prices, rose by 0.7 percent year-on-year, indicating fundamental stability.

In terms of the international balance of payments, China's total imports and exports reached 21.2 trillion yuan in the first half of the year, setting a new record for the same period in history, and foreign exchange reserves remained stable above $3.2 trillion. 

While "quantity" of growth reflects "stability" of economic operation, then "effectiveness" of transformation and "quality" of development highlight more of the forward momentum.

China's industrial transformation towards "new" and "green" trends has become increasingly evident this year. In the first half of the year, the added value of high-tech manufacturing above the designated size accounted for 15.8 percent of the added value of industrial enterprises above the designated size, an increase of 0.6 percentage points from the previous quarter; the output of intelligent and green products, such as integrated circuits, service robots, new energy vehicles, and solar cells, all maintained double-digit growth.

Changes also took place in people's daily lives. New technologies such as big data and artificial intelligence have spawned new consumption scenarios, while new consumption models such as live streaming sales and instant delivery have continued to emerge, driving an 8.8 percent year-on-year increase in online retail sales of physical goods in the first half of the year, with express delivery volume exceeding 80 billion pieces. 

Looking ahead to the second half of the year, Wen Bin, chief economist at China Minsheng Bank, predicts that exports will retain resilience, with the potential of downward pressure. He expects policy measures to intensify, aiming to expand domestic demand and support the sustained recovery o the Chinese economy, with ample room for fiscal policy to make a significant impact in the second half of the year.

Liu Jing, chief economist for Greater China at HSBC Global Research, notes that China's exports, industrial production, and investments in manufacturing and infrastructure have shown strong performance in the first half of the year, with industrial production and manufacturing investment being particularly notable factors. She predicts that China can meet its annual GDP growth target of around 5 percent.