Steady economic growth with downward pressure

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Editor's note: Liu Chunsheng is an associate professor at the Beijing-based Central University of Finance and Economics, and deputy dean of Blue Source Capital Research Institute. The article reflects the author's opinion, and not necessarily the views of CGTN.

The National Bureau of Statistics of China (NBS) released its latest national economic data on December 14. Generally speaking, there are both strong and weak points in China's current economic performance revealed by this report.

From January to November, the national fixed asset investment (excluding agriculture) was 60.93 trillion yuan, with a 5.9-percent year-on-year increase. The growth rate was 0.2 percent higher than that of the first 10 months and has been increasing for three consecutive months.

Suzhou Industrial Park in ‍Jiangsu Province, China. /VCG Photo

Private investment was 37.84 trillion yuan, an increase of 8.7 percent, and has maintained a growth rate of more than 8 percent since the beginning of this year. The investment in high-tech manufacturing and equipment manufacturing increased by 16.1 and 11.6 percent year-on-year respectively, 10.2 and 5.7 percent faster than that of the total investment respectively.

In November, the total retail sales of consumer goods reached 3.526 trillion yuan, a year-on-year increase of 8.1 percent, and the growth rate dropped by 0.5 percentage points from the previous month compared with 8.6 percent last month. At the same time, online retail sales amounted to 8.0689 trillion yuan from January to November, a year-on-year increase of 24.1 percent.

In terms of foreign trade, in November, the total import and export volume was 2.8337 billion yuan, a year-on-year increase of 9.1 percent, while the figure for last month is 13.4 percent.

China Import and Export Fair in Guangzhou, October 15, 2018. /VCG Photo

In the first three quarters of this year, the GDP growth rate was 6.7 percent, which laid a solid foundation for achieving the growth target of around 6.5 percent for the whole year. The data for November shows that the main targets for economic and social development in 2018 are likely to be met.

However, in terms of the external environment, amidst a slowing global economy the growth of international trade has slowed down, and commodity prices have fallen.

In particular, the negative impact of China-U.S. trade friction on the world economy has started to show, which has brought about new challenges and more uncertainties.

At the G20 summit, China and the United States reached a consensus on suspending the trade war and restarting negotiations. The truce between the world's two largest economies has calmed the nerves of investors in the global market. Whether or not China and the United States will finally reach an agreement will have a huge impact on international trade and investment in 2019.

Mexico Pavilion during the China International Import Expo in Shanghai, November 18th, 2018. /VCG Photo

From the domestic point of view, the effect of tax reduction of enterprises in the early stages showing, the policy of bail-outs increased the investment expectation, and the growth rate of fixed-asset investment has stabilized in the short term.

It is expected that the infrastructure investment will keep expanding. The year-on-year growth rate of total retail sales of social consumer goods hit a new low this year.

The previous individual income tax reform has increased disposable personal incomes. However, the fluctuations in real estate prices and capital market prices are having an impact on people's expectations of its continued increase, and to some extent has limited the positive effects of tax reforms.

To cope with the downward pressure on the economy and the uncertainty of the external environment, China needs to better implement the policies that have already been introduced. In the long run, a sustained and steady growth of the Chinese economy will depend on how well China's reform and opening up is proceeding.

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