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Agricultural Development Bank of China
News for Outlets

China's economy shows strong resilience and huge potential in H1

July 22, 2021


Abstract : China's economy showed steady growth momentum in the first half of 2021, and the gross domestic product (GDP) expanded by 12.7 percent year on year, with two-year average GDP growth at 5.3 percent.

PUDONG.jpg

Photo taken on Jan. 14, 2021 shows a night view of Lujiazui in Pudong of east China's Shanghai Municipality. (Xinhua/Fang Zhe)

BEIJING, July 22 (Xinhua) -- China's economy showed steady growth momentum in the first half of 2021, and the gross domestic product (GDP) expanded by 12.7 percent year on year, with two-year average GDP growth at 5.3 percent.

Experts pointed out that China's major macroeconomic indicators performed well in the face of complex and harsh domestic and international environments, as well as rising risks and challenges. This proves that China's economy is robust, and has a stable foundation, strong resilience and huge potential.

-- A more robust development foundation

China continued to benefit from macroeconomic policies in the first half of 2021, with economic growth, employment, goods prices and other indicators on a generally positive trend.

Employment is the foundation of people's livelihood. In the first half of 2021, China witnessed a better employment situation as the economy recovered steadily, and the employment-first policy became effective. A total of 6.98 million new urban jobs were created, achieving 63.5 percent of the expected target. The surveyed nationwide urban unemployment rate stood at 5.2 percent on average, lower than the forecast of about 5.5 percent.

Goods prices were also stable. In the first half of 2021, the consumer market had a relatively adequate supply. The consumer price index (CPI) grew by 0.5 percent, 3.3 percentage points lower than the same period of last year.

In the government sector, fiscal revenue continued to increase. From January to May, China's national general public budget revenue increased by 24.2 percent year on year.

Total profit of industrial enterprises with main business revenue of 20 million yuan and above increased by 83.4 percent year on year in the first five months of the year, with two-year average growth at 21.7 percent. The profit margins stood at 7.11 percent, up 2.05 percentage points over the same period of last year. From January to May, the total profits of enterprises above designated size in the service sector increased by 1.5 times year on year.

The per capita disposable income of residents was 17,642 yuan in the first half of 2021, up 12.0 percent year on year in real terms, and the two-year average growth was 5.2 percent, basically in line with economic growth.

"Considering that China has been hit by the COVID-19 pandemic since last year, it is fair to say that achieving 5.2 percent growth in per capita income was no mean feat," said Liu Aihua, spokesperson with China's National Bureau of Statistics. This growth was achieved on the back of economic recovery, which led to an increase in employment and thus income. Favorable policies also contributed, which allowed local governments to increase their efforts to ensure people's livelihood, and market players played their part as well.

-- Stronger development momentum

In addition to a rebound in production, China also saw steady recovery in investment, consumption and export in the first half of 2021, all of which contributed to economic recovery.

According to Liu Qiao, dean of Peking University's Guanghua School of Management, China's economy has recovered well after the pandemic, showing strong resilience and vitality. Its three major economic drivers, namely, investment, export and consumption, came into play at different times during the economic recovery, consolidating China's economic recovery. "Export took the lead, while consumption and investment, especially investment in fixed assets, lagged somewhat. By the first quarter of 2021 however, their data turned positive, and continued to recover in the first half of this year," said Liu Qiao.

Data showed that in the first half of 2021, total retail sales of consumer goods were 21,190.4 billion yuan, up 23 percent year on year, with two-year average growth at 4.4 percent, 0.2 percentage points higher than that in the first quarter.

In the first half of 2021, investment in fixed assets grew by 12.6 percent year on year, and the two-year average growth was 4.4 percent, 1.5 percentage points higher than that in the first quarter. In particular, manufacturing investment grew by 19.2 percent year on year in the first half of the year, with two-year average growth at 2.0 percent, accelerating 1.4 percentage points from negative to positive between January and May.

The improvement in manufacturing investment was due to strong external demand which drove export demand to a higher level, as well as a series of structural policies introduced by the government to support the manufacturing industry and small and medium-sized enterprises, said Wen Bin, chief researcher at China Minsheng Bank.

-- More positive factors

About China's economy perform in the second half of the year, Liu Aihua believed that an increasing number of factors will support China's economic recovery. First, endogenous growth drivers are becoming stronger. Second, confidence among market entities is growing. Third, the global economy has continued to recover, laying a foundation for external demand growth.

While acknowledging China's achievements, the country also needs to recognize that its economy is still in the process of recovery, and the foundation for stable recovery has to be further consolidated. According to Wang Jun, chief economist of Zhongyuan Bank, China's economic recovery was still patchy in the first half of 2021. Macroeconomic policies in the second half of the year should focus on growth stabilization, structural adjustment and economic transformation. China's economy is expected to gradually return to potential growth in the second half of the year.

"The national economy continued to recover steadily in the first half of the year as expected. In the second half of the year, many uncertainties that may affect China's economic development still exist," said Wen Bin. Stability should remain as the priority of macroeconomic policies. As external shocks and growth pressure rise, China should shift its focus toward stabilizing growth and market entities, and continue to intensify efforts to boost domestic demand.

Liu Qiao believed that China should focus its future policies on two areas: first, how to truly increase the disposable income of urban and rural residents, so as to give play to the basic role of consumption in economic growth; second, how to enable a large number of micro, small and medium-sized enterprises, especially private enterprises, to make enough profits and achieve more stable and sustainable development in uncertain internal and external environments.

(Edited by Gao Jingyan with Xinhua Silk Road, gaojingyan@xinhua.org)

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