China looks to boost growth after Q2 slowdown
The Chinese government’s economic policies will protect the country from negative growth and help promote the economy’s recovery, leading economists have said.
The latest figures show that China’s economic expansion slowed to 0.4% year-on-year in the second quarter of this year, mainly because of the resurgence of Covid-19 pandemic and problems with the global economy. The figures, from the National Bureau of Statistics (NBS), also showed that GDP grew by 2.5% in the first half of 2022.
Liu Shangxi, president of the Chinese Academy of Fiscal Sciences, told the China Wealth Management 50 Forum that the gradual improvement in some economic indicators is proof of the resilience of the Chinese economy.
The NBS said industrial output grew 3.9% and fixed-asset investment was up 5.6% year-on-year in June, up from 0.7% and 4.6% increases respectively in May. And retail sales grew 3.1% year-on-year in June, reversing the 6.7% fall in May.
Liu said the Chinese government should continue to ensure stability for the rest of the year, while continuing to reform and expand key economic sectors.
And he called for the speeding up of the process of granting permanent urban residency to those who move to cities from rural areas, saying it “will help stabilize employment, consumption and growth”.
Wang Yiming, vice-chairman of the China Center for International Economic Exchanges, told the forum that China’s economic recovery will likely gather pace in the second half of 2022, with better containment of the pandemic and policy stimulus measures taking effect.
“To promote the steady recovery of the economic growth, we should strengthen countercyclical adjustments as well as leave ample policy room for cross-cyclical adjustments,” Wang said.
He added that China “needed to ramp up policy measures aimed at stabilizing growth, expand effective investment, spur consumption, accelerate digital and smart transformation of industries and boost market confidence”.
Dai Xianglong, former governor of the People’s Bank of China, said GDP growth slowed in the second quarter as economic activity in key regions such as Shanghai was severely dented by the latest wave of Covid-19. Official data showed Shanghai’s GDP fell by 13.7% year-on-year in the second quarter, with a 5.7% decline in the first half of 2022.
However, Dai predicted that China’s economy could expand by over 5% year-on-year in the third and fourth quarters, meaning at least 4.5% full-year GDP growth.
Multinationals confident for the future
Meanwhile, multinational corporations are demonstrating their confidence in China’s economic prospects by looking to expand their investment in the country, the People’s Daily has reported.
A report released by Chinese Academy of International Trade and Economic Cooperation in June showed that foreign corporations increased their investment in China.
Leon Wang, executive vice-president of AstraZeneca, described China’s economic achievements as “very exciting”.
He said: “Our businesses in China have been keeping a steady growth for many years. I believe the country will create more development opportunities for multinational companies.”
Zhao Bingdi, vice-president of Panasonic China & Northeast Asia Company, said the company’s sales saw double-digit growth despite the challenges thrown up by the resurgence of Covid-19.
Economic data from the first half of 2022 showed that the added value of China’s high-tech manufacturing industry grew 9.6% year-on-year, among which computers, communications and other electronic equipment sectors expanded 10.2% year on year.
Another factor making China more attractive for foreign investors is the beefing up of intellectual property rights protection in recent years, meaning companies are more willing to introduce more cutting-edge technologies to the country, according to Liu Lijia, vice-president of LafargeHolcim Group, an global industrial company specializing in cement, construction aggregates and concrete.
In 2021, China had filed 69,500 international patents via PCT (Patent Co-operation Treaty), jumping from 18,000 in 2012, ranking first in the world for three consecutive years.