OPINIONS Why China's economy is strong enough to weather trade headwinds

OPINIONS

Why China's economy is strong enough to weather trade headwinds

Xinhua

03:09, July 20, 2018

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(Photo: Xinhua)

As the old Chinese saying goes, true gold fears no fire. The same could be said about China's economy, whose resilience again defied pessimists' projections and pressure from trade tensions.

China's GDP logged a 6.7-percent growth in the second quarter of this year, a slightly milder but still healthy increase compared with the 6.8 percent in the first quarter.

China remains one of the world's fastest-growing economies, and its pace of expansion has stayed within the range of 6.7 to 6.9 percent for 12 straight quarters.

The impact from the trade war ignited by the United States has yet to fully surface, but China's economy, increasingly reliant on domestic consumption, is well-positioned to withstand external pressure.

Exports, industrial output, and investment growth lessened, but domestic consumption and services, already a dominant driving force of the economy, have picked up the slack.

Final consumption and the service sector contributed to a majority of the economic growth in the first half, and their shares continued to expand.

Private investment picked up. High-tech industries outpaced the overall industrial sector in both investment and output.

Job data offers a wealth of information regarding economic strength. The surveyed unemployment rate in urban areas was 4.8 percent in June, the lowest level since the nation started to conduct such surveys in 2016.

These were achieved amid a prudent monetary policy, a deleveraging-focused regulatory environment, and pressure from escalated trade tensions. This fact only warranted more confidence in China's economic fundamentals.

Decades of fast GDP expansion have produced the world's largest middle-income group in the country, whose demands for a better life and high-quality goods give impetus to the economy's rebalancing and upgrading.

Sales of electrical home appliances, communication devices, and cosmetics products increased at double-digit rates in the first half. New energy vehicles, industrial robots and smart televisions outperformed traditional manufacturing sectors.

The Chinese economy is not trouble-free, and it would be self-deceiving to say there are no clouds on the horizon. But Chinese policy makers are vigilant and prepared.

Authorities have moved resolutely to contain leverage, one of the most alarming uncertainties for the economy. China's leverage ratio growth has slowed down substantially since 2017. And there are no signs the course would be reversed.

Policy makers are also making strides in market-oriented reforms to improve the business environment. Telling evidence of China's growing appeal for foreign investors is a 96.6-percent year-on-year surge in the number of new overseas-funded companies established in the country in the first six months.

Thanks to its intrinsic economic strength, China will be subject to only limited impact from the trade war.

As long as it accelerates supply-side structural reform and persists in improving the economy's quality and efficiency, the country will be able to withstand any future headwinds and emerge stronger from the pressure test.

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