Analysis by Zhao Wencai
BEIJING – A string of recently released economic data has once again attested to the resilience of the Chinese economy, which has gathered momentum to achieve a steady recovery.
Data from the National Bureau of Statistics (NBS) on Friday showed that for all the shocks and headwinds China has encountered recently, especially during the second quarter, the GDP of the world’s second-largest economy nonetheless expanded 2.5 percent in the first half of this year, with the second quarter achieving a positive growth of 0.4 percent.
Economists and observers worldwide have argued that China remains one of the world’s most reliable growth engines with its solid economic foundation and resilience.
GROWTH DESPITE DOWNWARD PRESSURES
With the mounting headwinds like COVID-19 resurgences and rampant inflation, many major economies have been caught off guard. The US consumer price index (CPI) in June marked the largest 12-month increase since November 1981, and inflation for the eurozone hit a record high of 8.6 percent in the year to June. Many experts have warned that both economies are “increasingly likely” to slide into recession.
Yet in the face of those downward pressures, China’s economy still showed strong resilience and great potential, and has largely kept its consumer prices stable. China’s factory-gate inflation has eased for the sixth straight month, and its major economic indicators bounced back in June.
As an open economy, China gains much of its economic strength from foreign trade. Data from the General Administration of Customs showed that foreign trade growth accelerated to 14.3 percent in June. From January to June, China’s foreign goods trade jumped 9.4 percent year on year to 19.8 trillion yuan.
Temporary shocks due to resurgences of the COVID-19 pandemic inflicted pain upon the country’s economy earlier this year when the central authorities enforced a dynamic zero-COVID approach to contain the virus and save lives.
“China has adopted an effective approach to combat the epidemic,” said Wolfram Elsner, a professor of economics at the University of Bremen in northern Germany, adding that “this is illustrated by the recent rapid growth in the economic figures.” China has been able to implement resolute anti-COVID measures “followed by a rapid push to resume work and production,” he said.
As consumer spending has gradually warmed up, China’s vast domestic market has played a vital role in helping cushion the effects of any downward pressure.
Recent data showed that as a pillar of the Chinese economy, the automobile market has seen a robust recovery. A total of 2.5 million vehicles were sold in June, up 23.8 percent year on year and 34.4 percent month on month.
China has a solid foundation for further economic growth due to its large population and domestic demand, which allows the economy to remain reasonably stable in the long run, said Sergei Lukonin, head of the Department of Economics and Politics of China at the Institute of World Economy and International Relations of the Russian Academy of Sciences.
TARGETED MEASURES TO UNLOCK POTENTIAL
Behind the hard-won economic bounce-back lies a raft of effective measures rolled out to stimulate growth.
In late May, the central authorities unveiled 33 measures in six areas to galvanize the economy. Some taxes and fees were scrapped or deferred to reduce business burdens, and digital coupons were given to residents to spur spending.
To dislodge foreign trade companies from operation difficulties, customs authorities across China have put forward 854 detailed measures to smooth trade logistics, strengthen financial support and stabilize industrial and supply chains.
While the employment situation has remained stable, the central authorities have taken action to shore up policy support for the labor market.
Efforts have been made to promote innovation, boost consumption and curb inflation to help unlock the enormous potential of the world’s biggest consumer market.
“The government is nurturing thousands of groups, big and small, in the fields of data science, network security and robotics,” which are working to “upgrade China’s industrial infrastructure,” The Economist said in an April article.
China’s economy is growing again, which is a good sign, said economic researcher Mohammad Ramadan based in Kuwait, noting that he is optimistic about China’s recovery and sees great potential in the economy.
Echoing such positive sentiment, Stefan Hartung, chairman of the board of management of German multinational engineering and technology company Bosch, said he expects a “better” second half of the year.
Sethaput Suthiwartnarueput, governor of the Bank of Thailand, also expressed his optimism about the Chinese economy’s medium- and long-term development prospects, noting that the authorities have sufficient policy space to address any downward pressure.
China is also at the global forefront of the digital economy and sustainable development, two new drivers of economic growth for the country’s medium- and long-term growth, he said.
STILL AN ENGINE OF GLOBAL GROWTH
Amid a gloomy global economic landscape where some major economies have been beset by ballooning inflation unseen in decades, if not an imminent recession, China’s recovery from a sling of challenges is timely.
Hartung said global challenges cannot be met without China, stressing that China and the rest of the world need each other.
“Given the centrality of China in the regional production networks ... it could do a tremendous amount in terms of trying to move the region towards a more sustainable basis for production in the economy,” Suthiwartnarueput said.
“The Chinese economy is the growth engine of the world economy,” Elsner said, who attributed his confidence in the economy to the country’s adherence to reform and opening-up.
This was echoed by Agustin Carstens, general manager of the oldest international financial institution, the Bank for International Settlements, who said that China’s resilient economy continues to be an engine of global growth.
Economists and experts say China has been sharing its development dividend with the rest of the world.
Joseph Matthews, a senior professor at the BELTEI International University in Phnom Penh, Cambodia, said China contributes to the world’s economic development through multilateral frameworks.
China has a relatively modern economic system, first-class infrastructure and competent labor resources, said Anna Malindog-Uy, a researcher of Philippine-BRICS Strategic Studies, adding that “the stronger China’s economic development is, the more countries that have trade and economic cooperation with China will benefit.” – Xinhua
Workers make clothes at a garment factory that supplies SHEIN, a cross-border fast fashion e-commerce company in Guangzhou, yesterday. – AFP
