China’s economy keeps steady recovery, to gain steam from new reforms

Published: July 17,2024

China’s economy grew by 5 percent in the first half of this year, signaling a steady recovery despite challenges at home and abroad, and reaffirming its role as a vital engine for global economic growth.

Bright spots are noticeable. The country reported a record high of H1 trade value in goods with a growth rate of 6.1 percent, and secured another bumper harvest of summer grains. The output of smart and green products such as integrated circuits, service robots, new energy vehicles and solar panels grew at a double-digit rate, cementing their role as new growth drivers.

Domestic demand continued to recover and external demand improved. In the first half of this year, final consumption expenditure contributed 60.5 percent to economic growth, driving GDP growth by 3.0 percentage points. Gross capital formation, a measure for investment, contributed to 25.6 percent of economic growth, driving GDP growth by 1.3 percentage points. Net exports of goods and services contributed 13.9 percent to economic growth.

In terms of policy support, the effects of large-scale equipment upgrades and policies encouraging the replacement of old consumer goods continued to manifest. Previously issued special-purpose bonds and ultra-long special treasury bonds, policy coordination and comprehensive measures provided favorable conditions for stable economic operation.

The growth rate is not easy to achieve given increased uncertainty and complexity in the external environment featuring geopolitical conflicts and international trade frictions.

The Chinese economy is still in a critical period of recovery as well as transformation and upgrading;growing in a wave-like fashion amid twists and turns. The H1 performance illustrated this. The second quarter saw a 4.7 percent GDP growth year on year, down from the 5.3 percent in the first quarter.

Extreme weather and floods contributed to the second quarter decline, which also reflected increasing difficulties and challenges in current economic operations, such as insufficient domestic effective demand.

From a medium- to long-term perspective, the trends of China’s stable economic operation and sustainable improvement remain unchanged. The transformation toward high-end, intelligent, and green manufacturing is progressing solidly, nurturing new industries and new growth drivers.

There has been improvement in energy security support capabilities and industrial and supply chain resilience. New technologies such as big data and artificial intelligence have created new consumption scenarios. Self-reliance in science and technology has continued to improve, injecting new momentum into the development of new quality productive forces.

Meanwhile, reforms are key to the high-quality growth of China’s economy. The third plenary session of the 20th Central Committee of the Communist Party of China, which started on Monday, will primarily examine issues related to further comprehensively deepening reform and advancing Chinese modernization.

Innovative and pace-setting reforms are projected to further consolidate consensus, emancipate and develop the productive forces, and enhance social dynamics. Efforts to deepen reform further across the board will continuously provide strong impetus and institutional guarantees for Chinese modernization.

Xinhua