China's economy gaining momentum, instead of losing steam

BEIJING -- As China's half-year economic growth data was released, some Western media and analysts hastily spouted their pessimistic cliches about the Chinese economy.

Is China's economy losing steam as they have claimed, or gaining momentum on the track to normalized growth? A panoramic and in-depth view of its H1 performance will provide a clear answer and show their gloomy sentiment on China's economic prospects is inconsistent with the facts.

China's GDP grew by 5.5 percent year-on-year in the first half of 2023, according to the National Bureau of Statistics (NBS). This growth rate is much higher than the country's 3 percent growth of 2022, and higher than its average annual growth of 4.5 percent from 2020 to 2022. Worldwide, this growth rate is also the highest among major economies.

Multiple industrial figures highlight the sustained momentum of the world's second-largest economy.

Value-added service output went up 6.4 percent year-on-year in the January-June period, accelerating by 1 percentage point from the first quarter. The service industry contributed over 60 percent to economic growth, and the business activity index for the service industry stood at 52.8 percent in June, within the expansion zone for a sixth consecutive month.

As a slew of policies were released to stimulate consumption, the contribution of final consumption expenditure to economic growth reached 77.2 percent, a significant increase compared to the rate for the entire previous year, highlighting the increasingly important role that consumption plays in the growth of China's economy.

In the first half of 2023, after deducting price factors, the real per capita disposable income of residents increased by 5.8 percent. This indicates a steady increase in residents' income, producing favorable effects in terms of boosting people's capacity and willingness to consume.

"Consumption has shown a relatively rapid recovery, and its role as the 'main engine' of economic growth has become prominent," said Zhao Tonglu, an NBS official.

The momentum of green development is also strengthening. China's economy has shown a trend of becoming greener. During the first half, the production of new energy vehicles and solar cells saw robust growth. China's export volume of lithium batteries, solar cells and electric passenger vehicles increased by 61.6 percent year-on-year.

Facing a complicated external environment, China still has challenges to address, both in pursuit of its economic growth target of about 5 percent for 2023 and in advancing its industrial upgrading. With the country redoubling its efforts in shifting the growth model, improving the economic structure and increasing the growth momentum, stable economic expansion can be ensured.

China is capable of achieving an average annual growth rate of 5 to 6 percent through 2035, said Justin Yifu Lin, dean of the Institute of New Structural Economics at Peking University.

The momentum of China's economic recovery will not fizzle out, but will be further bolstered. The upward trend will continue along with its normalized economic operation and expansion of growth driven by innovation, consumption and green transformation. Undoubtedly, China will remain an important source of impetus for the world economy.