Economic recovery stable in the first half, structural reform sees results
“China’s macro-economic operation maintained the recovery since the second half of 2016 in the first half with various improved macro-economic indicators. The nominal GDP growth has been recovering for five straight quarters. The micro basis for economic operation was further enhanced and the economic structure was further optimized. The economic growth achieved a good beginning.” Liu Fengliang, professor with the Economic School of Renmin University of China, indicated on June 17. Liu indicated that it means that China’s economy has bottomed out with risks and pressures preliminarily released. It also means that the supply-side structural reform has shown results.
The “China Macro Economic Forum” jointly hosted by the National Academy of Development and Strategy and the School of Economics of Renmin University of China was held in Beijing on the same day. Liu released the report on China’s macro economy on behalf of the group.
It pointed out that the GDP reached 18.068.3 billion yuan in the first half of 2017. The actual GDP growth reached 6.9 percent, 0.2 percentage point higher than the same period of the previous year and the annual average. Meanwhile, the GDP Deflator hiked significantly from 1.2 to 4.8. With the recovery of the GDP Deflator, the nominal GDP jumped from 8 percent at the end of last year to 11.8 percent, 4.8 percentage points higher than the same period of last year. It is the highest level since the first half of 2012 and has been higher than the actual GDP growth.
“Based on the previous economic cycles, the recovery of the GDP Deflator and the higher nominal GDP than the actual GDP growth are important symbols of the recovery of the macro economy.” Liu indicated.
The report also pointed out that China’s economic recovery shows more diversified features. The upper-stream industries, exports and state-owned enterprises continued to improve. The middle- and down-stream industries and private economy also face sluggish demands and few investment opportunities. There is still a long way to go for the overall demand leading the expansion of capacities.
Under the current macro policies, it is expected that the growth in infrastructure and property investment will slow down in the second half. The recovery of private investments will be further observed and there will be more downward pressures on investment in fixed assets. Meanwhile, with the slower growth in residents’ incomes, the consumption growth will be restricted. The international cycle will provide strong supports in the short term. Generally speaking, the bottom of this round of “asymmetrical W-shaped adjustment” will appear at the end of 2016 and the beginning of 2017. Assuming a deficit ratio of 3 percent and an exchange rate of 7 percent and on the basis on the international economic recovery and national policies, the GDP growth for 2017 will reach 6.7 percent.
It pointed out that despite strong supports to the economy this year, it will still face economic pressure in the following two years. It advised to further deepen reform to solve domestic economic problems. It requires short-term financial policies to support in the process.
Translated by Star Zhang
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