Expert: China's economic growth is stabilizing and structural adjustment is showing significant

On July 16th, the National Bureau of Statistics released economic data for the first half of the year. After preliminary calculations, the gross domestic product (GDP) for the second quarter of 2015 increased by 7% year-on-year. This growth rate is on par with the first quarter and has also achieved the government's annual target. Behind the stable economic growth, we can see changes in the economic structure.

Firstly, the tertiary industry has become the main driving force for economic growth. Data shows that the tertiary industry grew by 8.4% in the first half of the year compared to the same period last year, higher than the 7.9% in the first quarter. This may be related to the stock market and the real estate industry. In the second quarter, the stock market grew rapidly, and the profits of financial institutions increased accordingly. After the introduction of the new housing loan policy, real estate sales have significantly rebounded, which is conducive to the growth of the tertiary industry. The growth rate of the secondary industry in the first half of the year was only 6.1%, lower than the level in the first quarter, indicating that traditional industries are still facing structural adjustments. As for the structural contributions of investment, consumption, and exports to economic growth, the data released by the National Bureau of Statistics only mentions consumer spending. Data shows that in the first half of the year, consumption contributed 60% to economic growth. Compared to the same period last year, there was a 5.6% increase in the second quarter of this year. In the first half of the year, final consumer spending drove GDP growth by 4.2 percentage points. Based on the import and export data for the first half of the year, we can conclude that the contribution of net exports to GDP has also increased. So we can conclude that domestic and international demand is the main driving force behind GDP growth. In addition, although the real estate industry and traditional industries have caused some drag on GDP growth, the government's timely introduction of "stabilizing growth" stimulus measures has played a good buffering role. Although it cannot be denied that the current economic situation still faces downward pressure, we also have many reasons to remain optimistic: Firstly, the government has emphasized stable growth on many occasions and set the annual GDP growth target at around 7%. Since last year, national leaders have been practicing the "new normal" statement and emphasizing "bottom line thinking" to ensure that the national economy will not suffer from systemic risks, while fully considering employment demand. Considering the government's financial strength and strong execution ability, the economy will maintain stable growth. Debt swaps, vigorous promotion of PPP models in infrastructure construction, and other stabilization measures will maintain investment at an acceptable level. Secondly, with the support of the new housing loan policy, multiple interest rate cuts by the central bank, and the reduction of bank reserve requirements, domestic real estate sales will show signs of recovery in the short term. Thirdly, exchange rate is one of the important factors affecting external demand, and this factor has continued to improve in the past few months. Despite the strong uncertainty of external demand, the export volume in 2015 will remain high. The government should focus on establishing market rules, which requires patience. At the same time, it is important to maintain stable economic growth, avoid systemic risks, and prevent administrative intervention from hindering economic transformation. And how to maintain a good balance between the two requires skill.