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China's economic situation and prospects

Editor: Li Kun 丨CCTV.com

09-11-2015 10:49 BJT

By Lou Jifang, PhD, medium economist, China Welfare Lottery Management Center, Ministry of Civil Affairs

The 2015, the New Leaders Meeting of World Economic Forum and the 9th Summer Davos Forum from September 9 to 11 has been held in Dalian city, northeast China's Liaoning province.

The world economy slowly recovered during the first half of 2015. With the support of government economic policy, the Chinese economy maintained steady growth of 7 percent. In the latter half of the year, with the unstable market risks at home and abroad, China's economic development will still encounter pressure.

We can see from the economic data of the first half of the year that China’s economic development maintained good momentum.

Firstly, the economy continued to grow at a higher acceleration than developed American and European countries.

During the first half of the year, the gross national product was 29.69 trillion yuan, a 7 percent increase over the same period last year. The growth rate was about 2.5 times higher than the US and the United Kingdom and five times higher than France, Germany and South Africa.

Secondly, there was robust consumer demand and investment: New energy auto, internet sales and other emerging industries all had good developing momentum. What’s more, there was a rebound in the real estate market.

In the first six months of the year, China's total consumption reached 14.2 trillion yuan, a 10.4 percent increase over the same period last year. Internet sales, led by Taobao and JD, reached 1.38 trillion yuan, a 38.6 percent increase over the same period last year. Production of new-energy automobiles tripled, ranking first in the world. The entertainment industry boom, especially the national box office, achieved a new record of more than 20 billion yuan. The central bank continuously cut interest rates during the first half of the year, stimulating the real estate market as housing sales and prices rebounded.

Thirdly, the foreign trade situation greatly improved. Trade to foreign countries and cooperation has kept on expanding.

In the first half of the year, China achieved a trade surplus of 1.61 trillion yuan, with US-China trade growing 4 percent over the same period last year and achieving 9.3 percent growth in exports to the US. Through promotion of the Belt and Road Initiative, China constantly increased its share of exports with free trade partners and countries along the routes. China signed a high-speed rail cooperation project with Russia and participated in bids for Southeast Asian and other countries’ rail projects.

Fourthly, prices stayed stable and the employment situation maintained good momentum. Prices in the first six months of the year remained low, with the consumer price index steady at 1.2-1.5 percent. From January to July, 8.41 million new urban jobs became available, completing 84 percent of the target for the year. Thirty-one cities and towns retain a low rate of unemployment at about 5 percent.

On the whole, China's economic situation is improving, but there are still specific pressures.

First, industrial production remains in the doldrums. From January to July, the total profits of large industrial companies fell 1 percent. The total profits for July fell 2.9 percent compared with the same period last year.

Second, the investment growth rate came down. From January to July, China's fixed assets investment rose 11.2 percent. Its growth fell slightly to 0.2 percent less than that of the previous six months.

Third, small businesses have experienced more difficulties in production and operation.

Fourth, traditional processing suffered continuous negative growth. The imports and exports of state-owned enterprises and foreign-funded enterprises decreased over the same period of last year.

Last, global financial market risks expanded. Greece's debt crisis broke out in the first half of the year, causing a stock market crash and currency devaluations in several countries. The A-share market and the Renminbi exchange rate were also seriously affected.

Although China's economy faced pressures, it should also be noted that our economy has a broad mass consumption market. New industries like the internet and new energy are all on the rise. The proportion of tertiary industry and finance in the national economy, for example, is constantly growing. Backward productive capacity is being eliminated and the industrial structure is being optimized. Private and small companies burst with vitality. Income distribution has gradually improved, with a more balanced income being realized. China’s economic development is converting from quantity to quality improvements, an indication that the economy has entered a comprehensive development stage.

To sum up, China's economy has the basis for maintaining medium-high growth. Through a series of steady growth stimulus measures, structural adjustments and reform, China’s economy in the latter half of the year will continue to grow steadily. The 7 percent growth target for the year is expected to be realized.

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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