Industrial structure adjustment, new economy to unleash potential
China’s economy probably contracted 1 percent in the first half of 2020, as the second-quarter recovery fell short of expectations due to the COVID-19 outbreak, Chinese economists projected ahead of the official release of GDP data Thursday.
Data from the General Administration of Customs showed on Tuesday that China’s first-half foreign trade performance was better than expected, with both imports and exports growing in June.
Total first-half merchandise trade stood at 14.24 trillion yuan ($2.04 trillion), down 3.2 percent year-on-year. The decline narrowed 1.7 percentage points compared with the first five months.
In June, foreign trade rose 5.1 percent, with exports up 4.3 percent and imports up 6.2 percent.
The rise of imports in June reflected favorable policies in stabilizing economic growth, which strengthened domestic demand compared with April and May. It was a “hard-won” achievement with the global economy in serious crisis, Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times Tuesday.
Based on the latest foreign trade, consumption and investment data, Cong Yi, a professor at Tianjin University of Finance and Economics, told the Global Times Tuesday that China’s GDP rebounded in the second quarter but fell short of market expectations due to strict COVID-19 prevention measures.
“It’s unlikely the economy grew in the first half,” Cong said, noting that a contraction of about 1 percent was likely.
According to the National Bureau of Statistics, retail sales reached 3.2 trillion yuan in May, down 2.8 percent year-on-year, with the decline narrowing 4.7 percentage points month-on-month. Also in May, fixed-asset investment increased 5.87 percent month-on-month.
With strong resilience against the global pandemic and floods, the Chinese economy is expected to return to expansion in the third quarter.
Looking forward, “3-4 percent GDP growth in the second half of 2020 is possible. As economic growth in the second half accounts for more of the annual total in China, it is reasonable for the nation to achieve a GDP growth rate of 1-2 percent,” Tian said.
Amid uncertainties caused by the global pandemic and trade, China scrapped a numerical GDP growth goal in this year’s Government Work Report and forged ahead with goals including ensuring stability in employment, financial operations, foreign trade and people’s basic living needs.
“Despite slowing economic growth, there is no doubt that China will achieve its goal of poverty alleviation this year, as the proportion of the population classified as impoverished fell to 0.6 percent at the end of 2019,” Cong said.
Another problem that has emerged since the viral outbreak is unemployment, which eased from February’s high of 6.2 percent to 6 percent in April.
Amid pressure to stabilize the economy and employment, Chinese Premier Li Keqiang stressed during a meeting with economists and enterprise leaders on Monday that fiscal, monetary and employment-oriented policies will be meted out to help businesses.
“Multiple measures should be taken to help graduates and migrant workers find jobs, and differentiated tax and financial support should be provided to labor-intensive enterprises to secure employment,” Li said.
Cong said an unemployment goal of 6 percent should be reasonable for China this year, as the COVID-19 outbreak and painful structural adjustments in the economy have caused a relatively big shock to the job market.
“China’s huge economic growth potential will be released if we optimize the industrial structure to meet people’s needs and boost the development of the new economy,” he said.
Aerial photo taken on June 1, 2020 shows the Drum Tower and night markets in its surroundings in Kaifeng, central China’s Henan Province. The night-time economy in Kaifeng has begun to revive as the city’s evening businesses gradually reopen with the easing of COVID-19 restrictions. (Xinhua/Li An)
