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.
Despite the complex and ever-changing global environment as we enter 2024, the Chinese economy has demonstrated a stable and progressive development trend, driven by its unique resilience and vitality. In the first quarter, China's GDP grew by 5.3 percent year on year, slightly higher than the full-year growth rate of 5.2 percent in the previous year. This indicates a dual impetus from consumption and exports, supported by a series of precise and effective macroeconomic policies.
In the first half of 2024, the domestic consumption market in China has shown significant signs of recovery, becoming the main engine of economic growth. With the dual effect of steadily increasing household income and the trend of "consumption upgrading", consumer demand has continued to rise. After a period of adjustment, service industries including retail, catering, culture and tourism have seen revitalization. The integration of online and offline consumption models has further matured, aided by government measures such as consumer vouchers, employment support policies and improvements in the social security system, effectively boosting market vitality and injecting stimulus into the prosperity of the consumption market.
A bird's-eye view of a consumption promotion event held in Suzhou, Jiangsu Province, China, May 22, 2024. /CFP
Against the backdrop of global economic challenges, China's export performance has exceeded expectations, showcasing remarkable resilience. On one end, the implementation of the Belt and Road Initiative has brought China's goods to more international markets, especially with enhanced cooperation in regions like Southeast Asia and Central and Eastern Europe, resulting in a significant increase in export volumes. On the other end, the optimization of the structure of exports, especially the rising proportion of high-tech and electromechanical products with high added value, highlights the effectiveness of China's transformation and the upgrade of its manufacturing industry towards high-end and intelligent production, further solidifying its position in the global industrial chain.
Wind power equipment waiting to be exported at the Port of Lianyungang in Jiangsu Province, China, May 25, 2024. /CFP
In the first half of this year, China's fiscal policy has remained proactive, focusing on investments in infrastructure, livelihood security, technological innovation and environmental protection, effectively driving economic growth through expanded public investment. Simultaneously, a series of measures such as tax cuts, financial subsidies and tax incentives have reduced the burden on small and micro enterprises, enhancing market vitality. Arrangements for local government special bonds have ensured the effectiveness of investment while preventing local debt risks.
The People's Bank of China, the country's central bank, has continued to implement prudent monetary policy, ensuring adequate market liquidity through flexible and moderate adjustments. By utilizing tools such as open market operations and the medium-term lending facility, market interest rates have been effectively guided to support the development of the real economy. Specifically, credit policy support for small and micro enterprises and the manufacturing industry has reduced financing costs, creating favorable conditions for the growth of economic entities.
Within the overall framework of macroeconomic policies, structural reforms have continued to deepen, focusing on areas such as the reform of state-owned enterprises, optimization of the business environment and the opening-up of the service industry to enhance economic efficiency and address underlying issues. Additionally, increased policy support for emerging industries such as the digital economy, intelligent manufacturing and life sciences has injected fresh impetus into the economy, stimulating growth potential.
A smart factory producing ultra-thin monocrystalline silicon solar cells in Yinchuan, Ningxia Hui Autonomous Region, China, January 28, 2024. /CFP
Looking ahead to the second half of the year, it can be expected that China's macroeconomic policies will continue to adhere to the central theme of "ensuring stability while seeking progress", with a more pronounced synergy between fiscal and monetary policies.
The fiscal policy may further optimize expenditure structures, enhance fund efficiency and increase investment in livelihood projects and key sectors, while monetary policy will remain moderately accommodative, focusing on the precise application of structural tools in weak areas of the economy.
With the deepening implementation of the "dual-carbon" strategy, green and low-carbon development will become a distinctive feature of the Chinese economy in the second half of the year and beyond.
More policy measures incentivizing the development of green industries are expected, including increased investment in new energy, energy conservation and environmental protection, as well as innovative mechanisms such as carbon trading markets and green finance to guide social capital towards the green economy, accelerating the green transformation of China's economic structure.
The strategy of innovation-driven development will continue to lead economic development in the second half of the year. Guided by the 14th Five-Year Plan (2021-25), emerging industries such as the digital economy, intelligent manufacturing and biotechnology will embrace greater development opportunities. Increased corporate research and investment, and policies favoring high-tech enterprises, will promote the optimization and upgrade of industrial structures, bringing the country's economic development to a higher level.
(Cover via CFP)