First-half performance sets tone for solid growth

Good signs: A worker at a copper manufacturing facility in Jinhua, China. Optimism remains about the consumption recovery and economic growth in the second half, given the steady rebound in demand domestically. — Bloomberg

BEIJING: China’s economy grew by 5% in the first half of this year despite challenges such as weak demand and a complex external environment, providing a solid base for achieving the whole-year growth target, analysts say.

However, they cautioned that the weaker-than-expected second quarter performance indicates that the foundation for economic stabilisation is not yet fully there, highlighting the need to strengthen both counter-cyclical and cross-cyclical adjustments of macro policies to prop up the world’s second-largest economy.

Counter-cyclical adjustments focus more on short-term remedies to put the brakes on the current trend, while cross-cyclical adjustments aim to bolster long-term, sustainable growth with solutions to tackle problems across multiple economic cycles.

The policy focus should be placed on stronger financial and monetary stimulus to boost domestic demand, alongside measures to tackle structural issues and foster new growth drivers, they said.

This should include more property-easing steps to support the ailing real estate sector, further unleashing service consumption potential, the analysts added.

Data from the National Bureau of Statistics showed on Monday that China’s gross domestic product (GDP) grew by 4.7% from a year earlier in the second quarter, cooling from 5.3% in the first quarter of the year.

China’s industrial output grew by 5.3% in June from a year earlier, while fixed-asset investment grew by 3.9% year-on-year in the January to June period.

“The second-quarter growth fell short of market expectations mainly due to the slump in retail sales growth, while robust investment in infrastructure and manufacturing and better-than-expected foreign trade provided strong support for economic stabilisation,” said China Everbright Bank researcher Zhou Maohua.

Statistics from the NBS showed that despite the low growth of retail sales, a key measurement of consumer spending, which stood at 3.7% year-on-year in the first half of the year, retail sales of services registered relatively strong growth, expanding by 7.5% year-on-year.

Zhou remained optimistic about the consumption recovery and economic growth in the second half, given the steady rebound in demand for services domestically, stabilisation in the employment market and improvement in personal incomes.

“China’s consumption and domestic demand will likely pick up steadily in the remainder of the year, with the help of stronger policy stimulus, spending sprees during holidays and gradual stabilisation in the property sector,” Zhou said.

NBS data showed that China’s property investment fell by 10.1% in the first six months of this year, compared with the same period a year earlier, which was flat compared with the figure in the first five months. — China Daily/ANN