Chinese lanterns hang over an indoor commercial street at Yuyuan Garden shopping mall in east China's Shanghai, July 13, 2023. /CFP
Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion, and not necessarily the views of CGTN.
Since the second quarter of 2023, China's economy has returned to normal operation with the coordinated efforts of macroeconomic policies. However, the internal and external environment remains complex, which could potentially hinder the fragile economic rebound. To ensure sustained economic growth in the future, expanding aggregate demand is crucial. Benefitting from the low base effect compared to the same period last year, China's GDP grew by 6.3 percent year-on-year in the second quarter of 2023, according to the data released by the National Bureau of Statistics on Monday.
In the first quarter of this year, the country's economy rose 4.5 percent, surpassing market expectations due to the rapid rebound of service industries such as travel, catering, tourism, and transportation. Most travel activities have now resumed and even exceeded pre-pandemic levels, underscoring the significant role of consumption in driving economic development. The non-manufacturing business activity index has consistently operated above the threshold of prosperity since the beginning of this year.
During the first half of 2023, China witnessed an increase in both the quantity and quality of fixed asset investment. From January to June, the country's fixed asset investment grew by 3.8 percent year-on-year, including a 6 percent growth in manufacturing and a 7.2 percent growth in infrastructure investment. High-tech industries experienced investment growth of 12.5 percent. Major infrastructure projects in energy, water conservancy, transportation, and new types of infrastructure are progressing steadily.
In the second half of the year, as market confidence and expectations continue to rebound, the demand for financing is increasing, but credit allocation needs to be further strengthened to support the financing requirements of small and medium-sized enterprises and effectively meet the financing needs of the real economy.
Another vital aspect of stabilizing the economy is the high-end equipment industry. Since the beginning of 2023, China's equipment manufacturing industry has accelerated its progress. In the second half of the year, China will continue consolidating and expanding the competitiveness of high-end manufacturing industries such as new energy vehicles and shipbuilding.
Industrial integration, especially that of advanced manufacturing and modern service industries, is an important way to comply with the new round of technological revolution and industrial transformation, cultivate a modern industrial system, and achieve high-quality development.
Since last year, the Chinese government has introduced a series of stimulus policies including policies to stimulate the consumption of green smart home appliances. In the second half of 2023, the government is expected to introduce more macroeconomic policies to support the Chinese economy in achieving its annual growth target of around 5 percent.
Fiscal policy will remain a top priority. The government's budget revenue increased by 11.9 percent in the first four months of 2023, which will help unleash the potential of consumption and investment.
Customers take a picture at a barbecue restaurant in Zibo, a city in east China's Shandong Province which rose to fame because of its BBQ culture, May 3, 2023. /CFP
In the real estate sector, targeted easing measures may be introduced such as lowering the five-year loan prime rate (LPR) or lifting purchase restrictions.
In order to promote the continuous and overall improvement of economic operation, multiple ministries have successively held enterprise symposiums, aiming to further implement the normalized communication mechanism between the government and enterprises and to conduct a thorough investigation in advance for the subsequent improvement of relevant policies.
The driving force of economic growth comes from enterprises. Strengthening communication between the government and various market entities including state-owned, private and foreign enterprises indicates the government's support for the real economy, impulses confidence in businesses and stabilizes expectations of the market.
Private sectors undoubtedly play a significant role in China's economic recovery and high-quality development. The subsequent policies for private sectors will focus on stabilizing their expectations, breaking implicit barriers of market entry and expanding financing channels for private investment projects.
To maintain financial stability, it is expected that the government may consider debt restructuring or debt conversion plans in the second half of the year.
China has recently reiterated its intention to further open its domestic market and protect the interests of foreign investment, which will help attract foreign direct investment and promote foreign participation in the Chinese financial market.
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