According to a report on domestic economy in mid-2017, China’s export increased in the first half of this year thanks to higher forecasts for world growth as a result of global economic recovery.

In the first half of the year, the Chinese economy continued to stabilize and recover, following trends seen in the second half of last year while showing signs that supply-side structural reform is bearing fruit, according to a report released at the China Macroeconomic Forum (mid-2017) held at Renmin University of China on June 17.

The report credits various national macroeconomic policies focusing on supply-side structural reform as well as global economic recovery. A number of economic indicators showed optimistic trends. For example, the nominal GDP growth rate rose for five consecutive quarters.

This indicates that the Chinese economy has succeeded in rebounding after bottoming out. Risks and pressures have been relieved to a certain extent, and the economic structure has been optimized through reform, said Liu Fengliang, a research fellow from the National Academy of Development and Strategy at Renmin University.

The periodic driving effects of external demand on the Chinese economy have intensified in the context of inefficient coordination of domestic periodic factors, according to the report. In response to global economic recovery, especially within the US economy, there was an upward revision in forecasts for global growth. As a result, China’s export increased, spurring a recovery in industrial manufacturing.

In the first quarter of the year, investment in major Western countries rebounded rapidly, starting to replace consumption as the main economic driving force. As one of the most important exporters of investment goods around the world, China has a strong competitive edge.

 According to the report, the current round of supply-side structural reform, which focuses on five tasks—cutting industrial capacity, house destocking, de-leveraging, lowering corporate costs and improving weak links, is more targeted and direct, and it has achieved remarkable results.

Compared with previous reforms, the current efforts deemphasize the use of GDP ranking as an incentive while shifting the responsibility for leading the process from local governments to the central government. Moreover, this round of reform stresses evaluating the capacity of local governments to implement policy while highlighting the coordinating role of the Central Leading Group for Comprehensively Deepening Reforms.

However, Liu pointed out that the stimulus effects of external recovery on China’s total demand are limited. In addition, he said, China faces another major problem—a long-term decline in productivity—and the interplay between the two problems adds more difficulties. He suggested conducting a new round of reform to improve the mechanism for transmitting policies and release new driving forces before starting the next economic cycle in China.

The meeting was co-hosted by the National Academy of Development and Strategy and the School of Economics at Renmin University, and China Chengxin Credit Management.