A worker sews clothes in a manufacturing shop in Shanghai.

 

China's GDP grew 7 percent in the second quarter, demonstrating the effectiveness of measures to promote sustainability and reform, officials announced on July 15.

National Bureau of Statistics (NBS) spokesperson Sheng Laiyun said the hard-earned growth rate was the result of smart policy measures and timely adjustments to the evolving economic situation.

Cao Heping, a professor from the School of Economics at Peking University, said the economic environment abroad, coupled with  restructuring and a downturn at home, has sent traditional sectors into recession. The e-commerce boom, latent third-party market takeoff, extensive production services and supporting non-banking financial institutions have brought a new economy into shape and fueled overall growth, Cao added.
 

However, China still faces great downward pressure, which has limited policy options in the second half of 2015, said Tang Duoduo, deputy director of the Department of Macroeconomic Studies at the Institute of Economics at the Chinese Academy of Social Sciences. He suggested prudent use of stimulus packages to make room for restructuring.
 

Cao predicted the growth rate in the latter half of 2015 will be higher than 7 percent due to the dominance of demand and innovation over export and investment in powering the economy, in addition to proactive fiscal policies, prudent monetary policies and the lingering effects of 2014 stimulus measures.
 

Xu Hongcai, director of the Department of Information at the China Center for International Economic Exchanges, said exports grew in May and rose more than 2 percent in June. The decline of imports have substantially slowed, Xu noted, adding that such activity indicates moderate economic demand and bright prospects for the latter half of 2015 and possibly next year.

Complicated domestic and international economic environments as well as the slow global recovery necessitate further consolidation of the base for stabilization. Scholars hinted at more positive factors that can underpin future growth, urging policymakers to seize the initiative.
 

In the global context, Cao said Europe and the US are likely to be trapped in low growth and low inflation, while Japan might be plagued by weak recovery, putting considerable pressure on China’s external export demands. In addition to the sluggish traditional export market, it is necessary to readjust export strategies to change the external environment, he said.
 

Domestically, preparations must be made to deal with the stress of achieving decent full-year growth. Reductions to the reserve-requirement ratio, targeted interest rate cuts and control policies could take effect in the latter half of 2015, Cao predicted.

 

 

 

Huo Wenqi is a reporter at the Chinese Social Sciences Today.