China’s economic data for the first half of the year was released on 15th. According to the data of the National Bureau of Statistics, China’s GDP in the first half of the year was 56,264.2 billion yuan, a year-on-year increase of 2.5%. Among them, the economy grew by 0.4% in the second quarter.
What is the economic situation in China? For the first time, China through train held the "China Forum: Analysis Meeting of China’s Economic Situation in 2022", and interviewed many experts to interpret the top ten issues that everyone was concerned about.
What are the highlights of the semi-annual report?
Under the circumstance that the epidemic and the conflict between Russia and Ukraine have dealt a heavy blow to the global economy, China’s economy has withstood the pressure, stabilized and rebounded in the first half of the year, showing five bright spots.
In the second quarter, GDP achieved positive growth: in the first half of the year, China’s GDP was 56,264.2 billion yuan, up 2.5% year-on-year. Fu Linghui, spokesperson of the National Bureau of Statistics of China and director of the National Economic Statistics Department, said that the 0.4% growth in the second quarter was achieved against the background of the decline of major production and demand indicators in April and May, which should be said to be very difficult, reflecting the strong resilience of China’s economy.
Investment picked up faster: in the first half of the year, the national fixed assets investment was 27,143 billion yuan, up 6.1% year-on-year. Among them, the investment growth rate was 1.8% in April, accelerated to 4.6% in May, and further rebounded to 5.6% in June.
Strong rebound in import and export: In the first half of the year, the total import and export value of China’s goods trade reached 19,802.2 billion yuan, up 9.4% year-on-year, of which the growth rate in June was as high as 14.3%, further rising from 9.5% in May. Against the background of the huge impact on global economy and trade, the growth rate of China’s import and export has risen instead of falling, which fully highlights the strong resilience of China’s foreign trade.
Accelerated transformation and upgrading: In the first half of the year, the added value of high-tech manufacturing industries above designated size in China increased by 9.6% year-on-year, and investment in high-tech industries increased by 20.2%, both of which maintained rapid growth. The retail sales of physical online goods increased by 5.6%. The output of new energy vehicles and solar cells increased by 111.2% and 31.8% respectively.
Employment prices are generally stable: in the second quarter, the national urban survey unemployment rate averaged 5.8%. Despite the increasing inflationary pressure in major economies around the world, the inflation rate in China is still low. In the first half of the year, the national consumer price (CPI) rose by only 1.7% year-on-year, and the price increase in China was significantly lower than that in Europe and the United States by more than 8%.
What pressures did you withstand in the second quarter?
China’s economy finally achieved positive growth in the first half of the year, from the deep decline of major indicators in April to the narrowing of the decline in May, and then stabilized and rebounded in June. In this process, China’s economy withstood the pressure.
First, the impact of unexpected internal and external factors. From the Ukrainian crisis to repeated epidemics, major institutions have repeatedly lowered their global economic growth expectations. Frequent outbreaks in China have also impacted the stable operation of the economy. In the face of difficulties, China stepped up macro-policy adjustment, introduced a package of policies and measures to stabilize the economy, stabilized the economic market, and promoted positive economic growth in the second quarter.
The second is the pressure to stabilize prices. Food prices, go up! Energy prices, go up! Since the beginning of this year, international commodities have remained at a high level, and the impact on domestic imported inflation is also increasing. In the face of this situation, we have continuously increased efforts to ensure supply and stabilize prices in the market. In the first half of the year, the consumer price in China rose by 1.7% year-on-year, which was lower than the expected target of about 3% for the whole year, and also significantly lower than the increase level of more than 8% in European and American countries.
The third is the pressure of people’s livelihood such as employment. Affected by the impact of the epidemic, the employment pressure has suddenly increased this year. In response to this situation, all aspects are continuing to increase efforts to stabilize employment and strengthen the protection of people’s livelihood. The effect is also constantly showing. In the first half of the year, 6.54 million people were newly employed in cities and towns nationwide. In June, the national urban survey unemployment rate was 5.5%, which has been declining for two consecutive months. In the first half of the year, the per capita disposable income of the national residents actually increased by 3% year-on-year. Although it dropped from the first quarter, it still outperformed the economic growth rate.
What is the potential growth rate of China economy?
Fu Linghui, spokesperson of the National Bureau of Statistics of China and director of the National Economic Statistics Department, said that many institutions and scholars have calculated the potential economic growth rate of China, and the results are different. Generally speaking, most of the conclusions are that the potential economic growth rate of China is about 5.5% to 6.5% at this stage.
Fu Linghui said that in the future, with the increase of China’s economic volume, the constraints of labor resources and environment will be strengthened, and the potential growth rate will gradually decrease. However, from a global perspective, the potential growth rate of 5.5% to 6.5% is still in the middle and high level, especially under the condition of China’s large economic volume, it is very difficult to maintain the middle and high level of growth, which also shows that China’s economic growth potential is still relatively large.
What are the policy priorities in the second half of the year?
Zhang Yansheng, chief researcher of China International Economic Exchange Center, suggested at the China News Service’s "National Forum: Analysis Meeting of China’s Economic Situation in 2022" on the 15th that the policy in the second half of the year should focus on three aspects: First, coordinate scientific epidemic prevention and comprehensive economic and social recovery, and promote the return to work; The second is to promote the comprehensive start of national infrastructure projects; The third is precise policy, and more direct and targeted measures are introduced to stabilize consumption.
Su Jian, a professor at Peking University University of Economics and director of Peking University National Economic Research Center, told China News Service that China is a through train. At present, the focus is on coordinating epidemic prevention and control and macroeconomic growth targets. In the second half of the year, in addition to gradually implementing the policies put forward before, macroeconomic policies need to be further developed. In this process, efforts should be made to maintain the continuity of macro-policies, which should be both powerful and reasonable. This means that the current implementation of macro policies should not be too strong or too hard to prevent overdraft in the future. In particular, the scale of issuing bonds should be controlled within a reasonable range.
What challenges will foreign trade face in the second half of the year?
In the first half of the year, China’s foreign trade increased by 9.4% year-on-year, of which the total import and export volume and total export volume reached monthly highs in June.
Zhang Jianping, deputy director of the Academic Committee of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce of China, said on the 15th that China’s foreign trade increased by 9.4% in the first half of last year, which laid a solid foundation for stabilizing foreign trade in the second half.
Talking about the challenges faced by China’s foreign trade in the second half of the year, Zhang Jianping believes that the current global energy crisis and food crisis will impact the global market to a great extent, and the US economy may fall into recession in 2023, which will have a great contractive impact on the demand of the global market. Recently, the WTO also lowered its forecast for global trade growth from 4.8% to around 3%. Therefore, foreign trade enterprises need to closely follow market changes and make good use of dividends such as the Pilot Free Trade Zone.
He said that although some foreign trade orders in China did transfer to Vietnam and India, the added value of "Made in Vietnam" was limited, while India was limited by weak infrastructure, low administrative efficiency and poor business environment, so it was not easy to catch up with China.
How can investment continue to exert its strength?
In the first half of this year, China responded strongly to the unexpected factors, and the national economy stabilized and rebounded. Among them, investment plays a prominent role under the policy, which forms a strong support for China’s economy.
According to the 15th data, the national fixed assets investment (excluding farmers) in the first half of the year was 27,143 billion yuan, up 6.1% year-on-year.
Bai Jingming, a researcher and former vice president of China Academy of Fiscal Science, said that the growth rate of fixed assets investment in China exceeded the GDP growth rate in the first half of the year, which showed that when the economy was greatly affected by the impact and consumption growth slowed down, the investment growth rate supplemented the vacancy for stimulating the economy.
The data disclosed on the same day also showed that infrastructure investment in the first half of the year increased by 7.1% year-on-year, 0.4 percentage points faster than that in January-May.
Wen Bin, chief economist of Minsheng Bank, said that the growth rate of infrastructure investment continued to rise, mainly for three reasons. First, the smooth traffic logistics policy has achieved practical results, and the construction progress has been guaranteed; Second, because the source of funds has been guaranteed, the issuance of special bonds has accelerated; Third, the projects gradually landed. In addition to the 102 major projects in the 14th Five-Year Plan, a package of stable economic policies decided to start new projects, and a number of water conservancy projects, especially large-scale diversion irrigation, transportation, renovation of old residential areas and underground utility tunnel, also supported the infrastructure.
Lian Ping, chief economist of Zhixin Investment and dean of the research institute, believes that in the second half of the year, infrastructure and manufacturing investment will jointly promote fixed asset investment to continue to play a "steady growth" role. Driven by favorable factors such as sufficient reserves of financial support superimposed projects and in-place policy support, infrastructure investment will still maintain steady and rapid growth.
How to restart the consumption engine?
According to data released by the National Bureau of Statistics of China on the 15th, consumption in China increased by 3.1% in June, and the growth rate "turned from negative to positive". As one of the "Troika" driving the economy, China’s consumption shows signs of recovery, but the power is still insufficient. How should China restart the consumption engine?
Zhang Jianping, deputy director of the Academic Committee of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce of China, said that the demand of China residents for housing improvement, car trade-in, high definition multimedia and smart home appliances is increasing day by day, and the corresponding market supply should be increased to meet these needs. The potential of tourism consumption is also great, and all aspects of entertainment, accommodation, catering and so on should be further improved in quality and cost performance. To expand the steady growth of effective demand, we must make good use of e-commerce platform, and we must combine online and offline development. While online consumption is booming, we should also pay attention to the pressure faced by offline stores.
Zhao Ping, vice president of the Research Institute of the China Council for the Promotion of International Trade, said that in the second half of the year, the expansion of consumption should be more from the supply side, and the supply capacity of consumption should be enhanced, especially in the aspect of ensuring the supply of basic daily necessities at a stable price, so as to stabilize the basic consumption. The supply side should create a good market environment and create an open, transparent and predictable business environment. Increase support for small and medium-sized enterprises that were severely hit by the epidemic in the early stage, protect market players, and enable small and medium-sized enterprises to better seize market opportunities. Improve the quality and level of supply, encourage enterprises to innovate and develop, create new consumption highlights through supply-side innovation, and inject more impetus into consumption growth.
Can China stabilize prices?
Guo Liyan, director of the Comprehensive Situation Research Office of China Macroeconomic Research Institute, said on the 15th that China has the confidence and ability to keep prices stable. "Even if the current global inflation is high, looking forward to the whole year, there is no basis for comprehensive inflation in China."
First of all, China insists on scientifically grasping the strength, rhythm and key points of policies, and does not engage in strong stimulation of flood irrigation, which has a good support for stabilizing prices.
Secondly, China has done a lot of work in coordinating epidemic prevention and control, economic and social development, and coping with shocks. At present, the progress of industrial chain supply chain in key areas has been steadily advanced. Since the outbreak of the epidemic, especially last year and this year, the overall relationship between domestic supply and demand has been relatively stable, and there has been no mismatch between supply and demand in the international market, which is the premise of stabilizing prices.
At present, consumption is in the process of accelerating recovery, and the consumption of basic consumer goods such as food has been relatively stable. At the same time, the consumption of bulk consumer goods such as automobiles and home appliances is also recovering. Recently, a series of measures to promote consumption have been introduced from the central government to the local government, so contact consumption is expected to recover steadily in the second half of the year.
Has the real estate market recovered?
Ni Pengfei, director of the Center for Urban and Competitiveness Research of China Academy of Social Sciences, said that the downward pressure on the real estate market in the first half of the year exceeded expectations, but it still showed some resilience. In May and June, the decline in several core data of the property market narrowed or stopped.
At present, the real estate market is changing from negative cycle to positive cycle, and the market is expected to recover in the second half of the year. If there is no external unexpected impact, the real estate market may start to recover in the third quarter, and some indicators can turn positive in the fourth quarter. From a spatial perspective, first-and second-tier cities are expected to take the lead in warming up.
This recovery process will be accompanied by a game between positive and negative forces. Ni Pengfei pointed out that from the positive perspective, in the second half of the year, with the recovery of the macro economy and the introduction of various supporting policies, the property market is expected to be more stable. Moreover, the real estate market does have structural potential, especially in metropolitan areas, urban agglomerations and some cities with good economic development and large population inflows, and it does have the potential to continue to release rigid and improved demand. It is estimated that the commercial housing market will still maintain the scale of 1.2 billion to 1.5 billion square meters.
The negative forces mainly come from the risk spillover of housing enterprises and external uncertainty. The recent "loan suspension" storm is actually a manifestation of the risk spillover of housing enterprises. Affected by this, the overall credit of the real estate industry has declined, affecting the normal financing of enterprises.
Pang Yao, chief economist and head of research department of Jones Lang LaSalle Greater China, believes that the real estate market is expected to achieve a soft landing in the second half of the year, market sentiment and expectations will recover, and the year-on-year growth of real estate investment is expected to turn positive under the combined effects of factors such as the improvement of epidemic prevention and control situation, the continued implementation of differentiated real estate control policies, especially the housing credit policy, the effective disposal of debt default risks of individual housing enterprises, the stabilization of personal income expectations, the continuous decline in the purchase cost of rigid demand and improved housing demand groups.
What is the recovery of the areas affected by the impact of the epidemic?
In the first half of the year, the economy of some areas was greatly affected by the impact of the epidemic.
Fu Linghui, spokesperson of the National Bureau of Statistics of China and director of the National Economic Statistics Department, said that the economies of the regions that were greatly affected by the epidemic situation have accelerated their recovery. Although the economy of some areas was greatly affected by the epidemic in the second quarter, from a monthly perspective, with the overall improvement of epidemic prevention and control, enterprises resumed work and production, and the main economic indicators improved significantly in June.
In June, the added value of industrial enterprises above designated size in Shanghai and Jilin increased by 13.9% and 6.3% year-on-year, and decreased by 30.9% and 4.9% respectively last month. In terms of consumption, the retail sales of consumer goods above designated size in Jilin increased by 5.5% in June and decreased by 1.5% last month. In terms of employment, the survey unemployment rates in Shanghai and Jilin cities and towns decreased by 9.7 and 0.8 percentage points respectively compared with last month, indicating that the economic recovery in these areas which were hit hard by the epidemic was steadily accelerating.
Fu Linghui said: on the whole, the economy in most areas of China is generally stable, the growth in the central and western regions is faster than that in the east, and the trend of coordinated regional development has not changed. Some areas have encountered temporary difficulties due to the epidemic, but under the influence of various stable economic policies and measures, the economic operation has accelerated to recover.
