Emerging industries, consumption and reforms to fuel steady growth

 
China’s economy grew 6.6 percent last year, thanks to supply-side reforms and opening-up policies, the National Bureau of Statistics said yesterday.
 
The annual growth was above the government’s official target of around 6.5 percent.
 
Gross domestic product of the world’s second-largest economy totaled 90.03 trillion yuan (US$13.3 trillion) in 2018, the bureau’s data showed.
 
China is still, and will long remain, in an important period of strategic opportunity for development, and its fundamentals for long-term sound development will not change, said Ning Jizhe, head of the bureau.
 
GDP growth in the fourth quarter was 6.4 percent, slightly slower than the 6.5 percent growth in the third quarter.
 
While the 6.6 percent full-year growth was lower than the 6.8 percent rise registered in 2017, it is still a relatively fast pace that pointed to resilience in the economy, analysts said.
 
The growth was the fastest among the world’s top five economies, noted Ning, adding that China contributed to nearly 30 percent of the world’s economic growth and remained the largest contributor to global growth.
 
A closer look at the data shows some bright spots in the economy.
 
Fixed-asset investment has seen a pickup in recent months, thanks partly to government measures to improve infrastructure.
 
FAI rose 5.9 percent in 2018, 0.5 percentage points faster than that recorded in the first three quarters, according to the statistics bureau.
 
Ning noted that the demand for infrastructure investment is still high in areas including rural development and urban transport systems, as China still lags behind many developed countries in terms of infrastructure per capita.
 
“As we continue to implement policies this year, we can expect stronger investment data,” Ning said.
 
The stable investment growth is also a result of robust private and high-tech investment.
 
Private investment posted an increase of 8.7 percent last year, 2.7 percentage points faster than the previous year. 
 
Investment in high-tech manufacturing and equipment manufacturing increased 16.1 percent and 11.1 percent from 2017, both faster than a rise of 9.5 percent for overall investment in manufacturing.
 
Resilience was also seen in the growing spending power of Chinese consumers. Per capita disposable income stood at 28,228 yuan in 2018, up 6.5 percent in real terms.
 
Per capita consumer spending increased 6.2 percent in real terms, reaching 19,853 yuan in 2018. The increase was 0.8 percentage points faster than the previous year.
 
Employment improved steadily, 13.61 million new jobs were created last year, 100,000 more than 2017, enabling the figure to be above 13 million for six consecutive years.
 
The economy also showed greater vitality last year as continued reforms reinvigorated traditional industries and expedited the development of new growth drivers ranging from high-tech manufacturing to Internet-based services.
 
The government pressed ahead with supply-side structural reform last year, making steady progress, Ning said.
 
Capacity-cutting goals in the saturated steel smelting and coal mining sectors were beaten, and deleveraging was also pushed forward steadily. A reduction of taxes and fees nationwide totaled more than 1.3 trillion yuan, beating forecast. Housing inventories shrank, and weak areas were improved.
 
Meanwhile, new growth drivers were on the rise. Ning said manufacturing and services maintained rapid growth, citing surging sales in new-energy vehicles, optical fibers and smart televisions.
 
The service sector led growth with an increase of 7.6 percent last year, outpacing the industrial sector’s 5.8 percent and the agricultural industries’ 3.5 percent.
 
Services made up 52.2 percent of the country’s full-year GDP, 0.3 percentage points higher than a year earlier.
 
Industrial output expanded 6.2 percent in 2018, slower than the 6.6 percent growth in 2017. 
 
High-tech manufacturing, strategic emerging industries and equipment manufacturing — among medium and high-end manufacturing industries — posted growth of 11.7 percent, 8.9 percent and 8.1 percent from 2017.
 
The output of emerging industrial products has grown rapidly. Passenger trains, microwave terminals, new-energy vehicles, bio-based chemical fibers, smart televisions, lithium-ion batteries and integrated circuits increased by 183 percent, 104.5 percent, 40.1 percent, 23.5 percent, 18.7 percent, 12.9 percent and 9.7 percent.
 
Solid progress in economic upgrades and development in high-end manufacturing are reinforcing the country’s economic foundation, said Cheng Shi with ICBC International.
 
Yesterday’s data showed retail sales maintained a relatively fast growth pace, up 9 percent in 2018.
 
The statistics bureau highlighted that online retail sales jumped 23.9 percent from 2017 to more than 9 trillion yuan.
 
Data also showed consumption played an increasingly bigger role in the economy, contributing to 76.2 percent of GDP growth, up significantly by 18.6 percentage points from a year earlier.
 
“Service consumption kept booming,” Ning said. “Both the number of domestic trips and tourism revenue went up more than 10 percent, and movie box office revenue topped 60 billion yuan, up nearly 10 percent.”
 
He said that while the Sino-US trade friction has had a negative impact on the economy, the impact is controllable in general.
 
“The trade tensions did not and will not change the fundamentals of China’s economic development,” Ning said. “The ability of China’s economy to resist pressure and to cope with shocks won’t change in its long-term steady progress.”
 
Total imports and exports reached 30.5 trillion yuan last year, up 9.7 percent to hit a record high. This was the first time China’s annual foreign trade exceeded 30 trillion yuan.
 
The bureau noted that foreign trade with the countries along the Belt and Road increased by 13.3 percent, 3.6 percentage points higher than the growth pace of total imports and exports of goods.
 
Warning about a more complicated and tough external environment this year, Ning said China had the foundation, condition, confidence and capability to keep economic growth within a reasonable range.
 
Ning justified his judgment, citing favorable conditions for the country’s development, including opportunities brought by changes in global and domestic situations, a massive consumer market, rich resources and talent, development dividends unleashed by reforms, and ample room to alter policy.
 
With a population of nearly 1.4 billion and an expanding middle-income group that topped 400 million in 2017, consumption will remain a major driver of growth, while policies to increase residents’ income and improve the quality of goods and services will further unleash its potential, he said.
 
By increasing imports, analysts said China would provide more benefits to the rest of the world. The country has vowed to import US$40 trillion worth of products and services in the next 15 years.
 
Measures will be unveiled to stabilize employment, the financial market, foreign trade, foreign investment, domestic investment and expectations, and policy-makers repeatedly stated that the country will not resort to massive economic stimulus.
 
This year’s macro-regulation will focus on counter-cyclical adjustments, and the country will implement proactive fiscal policy and prudent monetary policy, Ning said.
 
With a long-term perspective to assess the country’s economic performance, Liu Shijin, an economist with the China Development Research Foundation, expects the economy to enter a stage of stable medium-speed growth in 2020, saying it would last for at least 10 years.
 
Quan Heng, director of the World Economy Institute under the Shanghai Academy of Social Sciences, said: “China’s economy remains in its strategic growth cycle albeit the country is likely to be under greater economic pressure in 2019.
 
“We now should consider more of what China’s influence is over the world economy, and as a responsible shareholder, we need to stabilize our growth and keep improving the quality of our growth.”
 
In his view, the year will see changes in China and around the world under the backdrop of technological advances, trade tensions and reforms in international organizations.