China remains sound and stable development despite slower growth

By Lu Yanan, Zhao Zhanhui, Ding Yiting, People’s Daily

Various economic indicators have suggested that the fundamentals for sound and stable growth of the Chinese economy remain unchanged and the necessary production factors for high-quality development remain unchanged.

China’s GDP grew by 6.2 percent year on year in the first three quarters this year, one of the fastest among the world's major economies, data released on Oct.18 by the National Bureau of Statistics (NBS) showed.

The 6.2-percent growth rate, although slightly lower than before, is still a high-speed growth under the global context, said Mao Shengyong, spokesperson for the NBS, adding that such a growth is estimated to be the fastest among countries with economic output of over $1 trillion.

China’s surveyed unemployment rate in urban areas stood at 5.2 percent in September, the same as August. The country had created a total of 10.97 million new urban jobs during the first nine months, finishing 99.7 percent of the target for the whole year.

As calculated by Liu Yuanchun, vice president of Renmin University of China, one percentage point of economic growth now means that the GDP has expanded $140 billion, much larger than before.

Also, one percentage point of GDP growth now brings far more new jobs than in the past, Li noted. Therefore, China's employment has remained stable on the whole though its growth slowed down.

The per capita disposable income of Chinese citizens grew by 6.1 percent in real terms during the first three quarters this year, outpacing the country’s per capita GDP growth.

The service industry has been growing constantly and become a stronger support for Chinese economy. During the period, the added value of China’s service sector accounted for 54 percent of the country’s GDP, up 0.6 percentage points from the same period last year.

Meanwhile, the tertiary industry contributed 60.6 percent to the country’s GDP growth, 24.3 percentage points more than the secondary industry.

The service industry has constantly solidified its role as a stabilizer of the economy, said Mao.

China has witnessed constant  dynamism and vitality in making innovations and creations as well as starting businesses.

           

During the first three quarters, the added value of high-tech manufacturing rose by 8.7 percent year on year, 3.1 percentage points higher than that of industrial enterprises above designated size and accounted 14.1 percent of the added value of all industrial enterprises above designated size.

           

From January to August, around 19,600 new enterprises were registered on average every day, signifying that the dynamism for innovation, creation, and starting business is becoming a strong driving force for high-quality economic development.

Some noticed that if there were a graph showing China’s GDP growth since the beginning of this year, then the country’s economy would be on a generally stable but modestly downward curve with the GDP growth of China in the first quarter, second quarter, and third quarter this year being 6.4 percent, 6.2 percent, and 6 percent respectively.

“The slowdown in China’s economic growth is more of a result of the slackening world economy and international trade,” said Kuang Xianming, director of the economic research center at the China Institute for Reform and Development.

In the World Economic Outlook (WEO) report released on Oct.15, the International Monetary Fund (IMF) lowered its global economic growth forecast for 2019 to 3 percent, down 0.2 percentage points from its estimation this July. The figure is also the lowest level since the international financial crisis in 2008.

Forecast for growth of developed economies in this year and the next year fell to 1.7 percent, while that of emerging markets and developing economies were revised down to 3.9 and 4.6 percent respectively, according to the report.

While Chinese economic growth in the first three quarters slowed to 6.2 percent, the performance is among the best in the world.

Some said China’s 6.2 percent GDP growth is “a 27-year low”. However, do they know what the economy was like 27 years ago?

If excluding price difference, the size of Chinese economy today is 10 times that of 1992, with every one percentage point of the growth now representing 10 times as much as the economic value it used to in 1992. Likewise, the 6-percent economic growth in the third quarter this year cannot be simply compared with the same growth rate in the past.

With the increase in the size of the economy and the per capita income of the citizens, economic growth will gradually slow down, which is a common phenomenon that has happened to many countries including Germany, Japan, and South Korea, according to Yang Guangpu, associate research fellow with the macroeconomic research center of the Development Research Center of the State Council, saying that there should be no worry about such a common issue.

With a population of approximately 1.4 billion and the world’s biggest middle-income group of over 400 million people, China enjoys the greatest prospect of growth in the world and sees steady growth in its citizens’ incomes.

During the first three quarters, service consumption took up 50.6 percent of households' final consumption expenditure.

“It has been estimated that the proportion of service consumption in the final consumption expenditures of China’s urban and rural residents would only be maintained at a steady level after it reached 60 to 65 percent, which means there’s still plenty of room for growth in service consumption,” Kuang pointed out.

China boasts vast space for investment. At present, the country’s per capita infrastructure level is equivalent to 20 to 30 percent of that of developed countries. In particular, there are enormous need for investment in infrastructure concerning such areas as people’s livelihood and regional development.

China has the most instruments and space for macroeconomic regulation and control in the world, Liu said, explaining that the country does not need to resort to massive stimulus measures.

Many problems can be overcome as long as China makes efforts to address major contradictions and continue following the guiding principle of pursuing progress while ensuring stability, Liu said.

“China has weathered out the Asian financial crisis and global financial crisis. We will be fine to cope with the downward pressure on the global economy in the next few years,” Liu added.

Aerial photo taken on Aug.30, 2019 shows the Lianyungang Port in Lianyungang city, east China’s Jiangsu province. (Photo by Wang Jianmin/People’s Daily Online)