CHINA’S GDP expanded 5% to reach 61.68 trillion yuan (US$8.49 trillion) in the first half of this year, data from the National Bureau of Statistics (NBS) showed yesterday, indicating the world’s second-largest economy has sustained the momentum of post-pandemic recovery.

In the second quarter, the GDP grew by 4.7% year-on-year, slightly down from the 5.3% growth recorded in the first quarter. The dip in GDP growth in the second quarter was affected by such short-term factors as extreme weather and floods. It also reflects the increasing challenges faced by the economy, including inadequate domestic demand and clogged circulation, according to an NBS spokesperson.

Observers said that the reading signaled that China is on a firm track to hit the annual economic growth target of around 5% in 2024. They also expected the tone-setting third plenary session of the 20th Communist Party of China (CPC) Central Committee to inject new impetus into economic growth in the second half.

“Although the GDP growth in the second quarter is lower than the first quarter, it’s still a relatively fast growth among major economies, which builds a sound foundation for the achievement of the annual GDP target,” said Chen Fengying, an economist and former director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, as quoted by the Global Times.

Factory activity remains a main driver for the economy, partly fueled by resilient demand overseas. The added value of industrial enterprises above a designated size jumped 6% year-on-year in the first six months.

Meanwhile, retail sales of consumer goods in the first six months were up 3.7%, and fixed-asset investment edged up by 3.9%, NBS data showed.

“The gaps between the supply and demand sides are narrowing, though the mismatch still persists. The domestic demand shows a conspicuous rebound in the first half,” said Zhang Jun, chief economist at China Galaxy Securities.

Chinese authorities have already put in place a bunch of measures to stimulate market demand, including the issuance of 1 trillion yuan worth of ultra-long special treasury bonds as well as driving large-scale equipment renewal and trade-ins of consumer goods.

Analysts said that the fundamentals of China’s economy are anticipated to further stabilize and improve in the second half following the convening of the reform-themed Third Plenum that will map out a blueprint for the country’s long-term development.

Economists also took note of the recovery of consumer spending. “Especially, the country’s tourism industry reported robust growth over recent months, which will play an increasingly remarkable role in expanding domestic demand,” Chen said.

Despite such challenges as the shrinking property sector and the increasingly volatile global geopolitical situation, Chen expresses confidence in China’s long-term economic prospects. “More efforts are needed to boost social confidence and unleash effective demand. To this purpose, we need more investment,” she said.

Zhang suggested the authorities accelerate the issuance of special government bonds and further strengthen counter-cyclical adjustments to reduce the financing costs for businesses.(SD-Agencies)