Economic trends in the second half of the year: Can the economy operate steadily?

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Online news: At present, China’s economy is in a critical phase of transition, moving from recovery and improvement to stable growth. On the one hand, the economic fundamentals are continuing to improve: GDP is maintaining a rapid growth rate, fiscal revenue is rising steadily, and the incomes of urban and rural residents are increasing gradually. On the other hand, the economy faces numerous difficulties and challenges, showing an unprecedented degree of complexity and turbulence. **Data released by the Bureau of Statistics for the first half of the year show that GDP growth slowed down by 1 percentage point in the second quarter compared to the first quarter, indicating a slowdown in economic growth. The Manufacturing Purchasing Managers’ Index (PMI) for June and July, as released by the China Federation of Logistics and Purchasing, was 52.1% and 51.2% respectively, showing a further decline on a month-on-month basis as the momentum of economic expansion weakened. At the same time, the impact of the European debt crisis spreading on our economy remains to be seen. The convergence of these uncertainties poses challenges to the healthy and stable operation of the economy in a complex environment. 　　The fundamental trends remain positive; the economic growth rate is slowing down but still remains high. 　　Since the beginning of this year, while maintaining the continuity and stability of macroeconomic policies, the central government has enhanced the targeted nature and flexibility of macro-control. At present, the economic growth rate is slowing down and the momentum of economic expansion is weakening, yet the overall positive trend in the economic fundamentals remains unchanged, with economic operations in line with the expectations of macroeconomic regulation. The continuous improvement in fundamentals is due to the steady growth momentum of economic expansion. Firstly, it effectively expanded domestic demand in the process of adjusting the economic structure, thereby promoting continuous growth in consumption. In the first half of the year, the total retail sales of consumer goods amounted to 7,266.9 billion yuan, representing a growth rate of 18.2%. The per capita disposable income of urban residents increased by 7.5% in real terms, while that of rural residents rose by 9.5% in real terms. The steady increase in the incomes of urban and rural residents has laid the foundation for the continued growth in the total retail sales of consumer goods in the second half of the year. Secondly, investment has seen steady growth as an important internal demand. In the first half of the year, China’s fixed asset investment amounted to 1,141.87 billion yuan, representing a growth rate of 25%. The actual amount of foreign capital utilized was 51.43 billion yuan, with a growth rate of 19.6%, thereby contributing to the sustained economic growth. Once again, external demand maintained a steady growth trend. In the first half of the year, China’s total export value increased by 35.2%. Data released by the General Administration of Customs on August 10 showed that China’s total exports in July reached $145.52 billion, an increase of 38.1%. The slowdown in economic growth is the result of the combined effect of a series of macro-control policies. In light of the new situation of economic stabilization, recovery, and improvement, as early as the end of last year, the central government called for greater emphasis on promoting a shift in the mode of economic development and economic structural adjustment. Since the beginning of this year, clear regulations have been established regarding the planning and use of local government bonds. The central bank has raised the reserve requirement ratio three times, and through targeted guidance, it has worked to maintain the money supply while moderating liquidity. Strict regulatory measures have also been introduced for the real estate market in an effort to bring down the rapidly rising housing prices. At present, a series of macro-control measures have begun to show results. The various indicators for the second quarter show clear signs of a slowing economic growth rate. Does this mean that there have been changes in the economic fundamentals? **Zhang Xiaojing, head of the Macroeconomics Research Office at the Institute of Economics of the Chinese Academy of Sciences, said that macro-control policies have become more targeted, and incentive policies are adjusted as appropriate. Overall, in the second half of the year, the positive trend in the economic fundamentals has not changed. Generally, an PMI index above 50% indicates overall economic expansion, while a value below 50% suggests economic recession. To date, the PMI has remained above 50% for 17 consecutive months, indicating that the economy is still in an expansionary phase. Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing, believes that as the market conditions both domestically and internationally have improved significantly compared to the same period last year, the economic growth rate will gradually stabilize in the future. 　　Although drought and flooding have had some impact on agriculture this year, they do not affect the overall outcome of a good grain harvest. Chen Houyi, vice president of the China Economic Law Research Association, said that the transformation of the economic development model, the adjustment of the economic structure, and the promotion of economic upgrading and transformation will continue to advance steadily.