Chinese economy enjoys both resilience and potential

By Feng Hua

A series of important economic data was released in October. China’s economy performed within an appropriate range, growing 6.7 percent in the first three quarters of 2018. It maintained stable and safe, laying a solid foundation for reaching the target annual growth of around 6.5 percent.

Such data indicated the basis for China’s economic stability, and also suggested the

country’s growing potential despite the obvious changes of external environment.

Therefore, the analysis of economic data calls for not only looking into the short-term ups and downs, but also accurately grasping the momentum of medium and long-term economic development. It would be easy to see the resilience and potential of the Chinese economy by taking into consideration both the current situation and future trend.

The resilience and potential rest with consumption upgrading and structural optimization. In the first three quarters, consumption contributed 78 percent to China’s economic growth, up 14 percentage points from a year ago.

China’s total consumption is still enlarging, and consumption structure upgrading. During the National Day holiday, the sales volume of retail and catering enterprises across the country has reached 1.4 trillion yuan, with a year-on-year daily sales growth of 9.5 percent.

The sales volume of washer dryer combos, water purifiers, air conditioners with purifier options, and smart toilet seat covers doubled and even tripled compared with that in the same period last year.

Traditional consumption of food, clothing and daily necessities has been upgraded, and the consumers now focus more on quality-, customization-, and experience-oriented consumption. They are positive changes brought by China's consumption upgrading.

The resilience and potential of the Chinese economy come from market vitality and innovation. Starting from this October, a rise of disposable income will be seen on the payrolls of many people, as the country has raised the minimum threshold for personal income tax from 3,500 yuan (about $510) to 5,000 yuan per month.

More pleasantly, China is planning to add more deductible items from taxable personal incomes. Besides, the country is also releasing the signal to slash taxes and fees and stabilize market expectations, in order to stimulate market vitality.

From January to September, the growth rate of fixed-asset investment was 5.4 percent, putting an end to the continuous growth decline since the start of this year. A big part of the growth came from the manufacturing industry, for which the country implemented tax reduction policies and relaxed financing restrictions.

The latest statistics indicates that China's total research and development investment last year increased by 12.3 percent year-on-year and reached a new high. It can be expected that the subsequent series of reductions on taxes and fees will give enterprises a larger room for innovation and development.

The resilience and potential are also rooted in the strong willpower of China. Over the past four decades, China has firmly stuck to its goals no matter how the world or the market changed. In this October, a set of reform measures were launched to cheer on poverty alleviation and rural revitalization.

China observed the Fifth National Poverty Relief Day on Oct. 17. By that day, 85 poverty-stricken counties were lifted out of poverty. The country’s rural impoverished population dropped by 68.53 million in the past five years, and the poverty reduction rate reached 70 percent.

This year marks the first anniversary of the implementation of the rural revitalization strategy. China now stands at a new starting point of developing agriculture, rural areas and farmers, with rural reforms deepened across the board, modernization of agriculture and rural areas accelerated, weakness improved and the solid foundation cemented.

Source: People’s Daily