Language : English 简体 繁體

Report Card: China’s Economy Recovering

Aug 22, 2023
  • Zhong Yin

    Research Professor, Research Institute of Global Chinese and Area Studies, Beijing Language and Culture University

As China has been recovering steadily from the COVID pandemic this year, its economy and society have been returning to normal operations in an all-around way.

In the first half of the year, the country’s GDP achieved an increase of 5.5 percent year-on-year, significantly faster than the 3 percent economic growth in all of last year. In the second quarter, notably, the country’s GDP achieved a year-on-year increase of 6.3 percent, equivalent to the average in the second quarter of 2017-19, and has basically returned to the level it was at before the epidemic. From a quarter-on-quarter perspective, GDP in the second quarter increased by 0.8 percent, and the quarter-on-quarter growth rate has increased for four consecutive quarters, reinforcing the fact that the economy has maintained a recovery trend.

Three key words can be used to grasp the current economic situation in China. The first is “recovery,” referring to the overall economy and the steady return of both supply and demand. On the supply side, production in various industries grew steadily. Agriculture was stable, with the added value of farming, forestry, animal husbandry and fisheries increasing by 3.9 percent year-on-year. Industrial production was also stable: Its added value increased by 3.7 percent, driving economic growth by 1.2 percentage points. The added value of manufacturing increased by 3.9 percent, accounting for 27.8 percent of GDP. From January to July, the added value of industrial enterprises above a designated size increased by 3.8 percent.

On the demand side, in the first half of the year, total retail sales of consumer goods increased by 8.2 percent, maintaining rapid growth. The contribution rate of final consumption expenditure to economic growth reached 77.2 percent, significantly higher than last year.

Investment continued to grow, and investment in key areas grew rapidly, effectively playing the role of optimizing the supply structure. Fixed asset investment increased by 3.8 percent, of which infrastructure investment and manufacturing investment increased by 7.2 percent and 6 percent, respectively.

The second key words are “getting better,” since the economic structure has been continuously optimized and the quality of development has been steadily improved. On one hand, the industrial structure continued to be optimized. In the first half of the year, the added value of the service industry accounted for 56 percent of GDP, and its contribution to economic growth reached 66.1 percent, which was higher than the contribution rate of secondary industries (32.3 percent), an increase of 1.4 percentage points over the same period the previous year.

Further, the consumption and investment structure also improved. Retail sales of upgraded commodities — such as gold, silver, jewelry, sports and entertainment products in units above the designated size — increased by 17.5 percent and 10.5 percent, respectively. Investment in high-tech industries increased by 12.5 percent year-on-year, which was significantly faster than the growth of all investment.

On the other hand, the momentum of innovation has continued to increase. In the first half of the year, the added value of such new industries as the above-scale aerospace and equipment manufacturing industry and the lithium-ion battery manufacturing industry increased by 22.9 percent and 29.7 percent, respectively; and the added value of the information transmission, software and information technology service industry increased by 12.9 percent. New business forms continued to be active. Online retail sales of physical goods increased by 10.8 percent, accounting for 26.6 percent of the total retail sales of social consumer goods.

The third word is “stability.” Prices were generally stable. From January to July, national consumer prices rose by 0.5 percent year-on-year. Per capita disposable income grew by 5.8 percent after deducting price factors, significantly faster than the growth rate of last year. And the income gap between urban and rural residents also narrowed.

Hitting these figures was by no means an easy task, given the circumstances of increasing adverse impacts on China due to changes in the international environment, the intertwined and superimposed domestic cyclical structural contradictions and the gradually emerging risks and hidden dangers in some areas. The following policies noted here helped obtain the result.   

First is the adoption of a precise and powerful macro-control method — not only proactive fiscal policy and a prudent monetary policy but also various policy coordination and counter-cyclical adjustments — with the aim of creating a good policy environment for the development of enterprises and laying a solid foundation for the continued improvement of the economy.

Second is the promotion of self-reliance and self-improvement, and acceleration of the construction of a modern industrial system supported by the real economy. To effectively stimulate the vitality and endogenous motivation of business entities, intensive efforts have been made to clean up accounts owed to enterprises, transform and upgrade traditional industries and comprehensively promote the upgrading of high-end, intelligent, and green manufacturing systems. The country also accelerated the cultivation and growth of strategic emerging industries, such as artificial intelligence, new materials and new energy.

Third is the firm implementation of a strategy of expanding domestic demand. A series of policy measures have been undertaken, such as increasing residents’ income by vigorously promoting employment and other measures, boosting bulk consumption — cars, for example, with the construction of charging and parking facilities, Another example is the delivery of housing to those who suffer from developers’ broken capital chain, and promoting service consumption through better quality.

Last is the adherence to a people-centered approach and doing a solid job of improving people’s livelihoods. Efforts in this regard include speeding up the supply of public services such as elderly care, childcare, education, and medical care; strengthening safety supervision, as well as disaster prevention, mitigation and relief; and continuously improving people’s living standards.

It should be kept in mind that all the above are more about structural and long-term goals rather than a better GDP number in the short-term. As long as China sticks to this people-centered approach, it will succeed in high-quality development in the days to come.

You might also like
Back to Top