In general, the prospects for the Chinese economy are promising, and there is broad space for development, a scholar said.

 

Scholars have revised evaluations of China's economic performance in the first half of the year based on new macroeconomic data released by the State Council Information Office on July 15.
According to the National Bureau of Statistics (NBS), the GDP grew by 6.7 percent year-on-year in the first half of 2016. The national economy experienced identical growth rates in the first and second quarter, hinting at a phase of stabilization.
 

Some indicators have exceeded projections, said Chen Jie, assistant director of the Institute for Advanced Research at the Shanghai University of Finance and Economics. “In general, the prospects for the Chinese economy are promising, and there is broad space for development.”
 

After analyzing the macroeconomic situation at home and abroad, Zhang Bin, head of the Global Macroeconomic Research Division at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, pointed out that the global macroeconomic environment is quite stable this year. Despite unsatisfactory performance, developed economies and emerging markets saw no major fluctuations, he added.

In the first half of 2016, the Chinese economy was driven by upward forces but still faced downward pressure. The real estate boom led some industrial products to perform better than they did last year, but the downward trend remains strong. New construction areas and housing sales have reached a ceiling. As structural adjustment continues, challenges still loom large, Zhang said.
 

Liu Yuanchun, executive director of the National Academy of Development and Strategy at Renmin University of China, responded to worries about China’s outlook, saying that the domestic economy has shown signs of stabilization.
 

The Consumer Price Index (CPI) has rebounded to more than 2 percent, while the Producer Price Index (PPI) experienced a significantly smaller decline compared to last year.  The turnaround of corporate profit growth and the rally of the property market also indicate that China’s economy is unlikely to suffer hard landing, Liu said.
 

There are also concerns about the slowdown in private investment and misallocation of financial resources. Scholars urged careful research on new scenarios in longstanding problems, suggesting compensating for institutional deficiencies to facilitate a smoother relationship between the government and the market while boosting confidence in private investment.
 

Although the growth of private investment slipped a bit, the structure of fixed-asset investment continues to improve. NBS data reveals that the investment in the service sector maintained double-digit growth, displaying a continued increase of 11.7 percent in the first half of 2016.
 

The service sector remains the main driver of stable growth. In 2015, services accounted for more than 50.5 percent of the GDP for the first time, reaching 50.5 percent. In the first half of this year, the sector continued to grow rapidly, jumping 7.5 percent year-on-year and accounting for 54.1 percent of the GDP. The rate of contribution to economic growth arrived at 59.7 percent, according to the NBS.

Li Wenbo, director of the Center for Macroeconomic Research at Xiamen University, said the sustained development of services is sending a signal that the composition of demand in China is changing. The country is shifting its focus from the real economy to services, Li said.
 

As demand for services like travel, healthcare and education grows, the development of the sector will not only address an increasingly diverse range of needs but also form a crucial base for enhancing labor quality, accumulating human resources and propelling economic transition, Li said.

Therefore, the development of production services is also the key to improving product quality, technological innovation and production, and efficiency in the real economy, Li said.

 

 

 

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