The mid-year report on China's economy has been released, showing a 4.7% year-on-year growth for the first half and a 4.3% expansion for the second quarter.
While some may interpret the deceleration in GDP growth as a sign of weakness, a superficial reading of the data misses the bigger picture. A closer examination reveals three key areas of strength.
Assessing the Scale
First, consider the sheer scale. Compared to the first half of last year, China's GDP increased by 3.6 trillion yuan, marking the largest incremental gain for the same period in the past five years.
Amid persistent global geopolitical conflicts, volatile energy prices, and disruptions to global supply chains, China's ability to stabilize its economy and maintain operations within a reasonable range under multiple external shocks demonstrates significant resilience. This stability alone is a substantial achievement.
A global comparison further highlights this performance. For instance, the US economy is expected to slow from 2.7% growth in Q1 to 2.1% in Q2, Japan is projected to decelerate from 0.4% to 0.2%, and the Eurozone is anticipated to grow around 0.5%.
An interesting contrast has emerged recently. While the International Monetary Fund (IMF) downgraded its global growth forecast, it simultaneously raised its projection for China's economic growth by 0.2 percentage points to 4.6%. This divergence underscores international recognition of China's economic resilience and potential.
Evaluating the Momentum
The IMF explicitly cited the strong performance of China's high-tech manufacturing sector and its supportive export contributions as reasons for the upward revision.
In the first half, value-added in high-tech manufacturing surged by 13.3%, outpacing the growth of all industrial enterprises above a designated size by 7.9 percentage points. The total value of imports and exports exceeded 25 trillion yuan for the first time.
This robust growth is driven by new engines of development. Preliminary estimates from the National Bureau of Statistics indicate that new growth drivers, represented by high-end manufacturing, the digital economy, and modern services, contributed over 40% to the economic growth in the first half.
For example, fueled by a surge in global demand for high-end computing and memory chips driven by AI advancements, integrated circuit output from major industrial enterprises rose 23.1% year-on-year in H1, reaching a total of 279.8 billion units. This translates to an average daily production exceeding 1.5 billion chips.
AI is also supercharging foreign trade. Exports of integrated circuits reached $177.28 billion in H1, skyrocketing 96% year-on-year, nearly doubling. An economist noted that the development of high-end manufacturing internally helps stabilize industrial and supply chains, and externally contributes to safeguarding economic security.
Examining Global Contribution
In the first half, China's imports surged even faster than its exports, growing 22.1% compared to export growth of 13.4%. Import value surpassed 10 trillion yuan for the first time, with growth recorded from over 150 countries and regions.
This means that China, as the world's top manufacturing nation and second-largest consumer market, is opening its doors to absorb global goods, providing tangible opportunities worldwide.
China's contribution to the global economy extends beyond being a growth engine; it also acts as a stabilizing force. Several international media outlets have recently noted China's role in supporting the world economy, with reports suggesting China is underpinning the global economy by reducing its oil imports.
Data shows China's crude oil imports in June fell 41.3% year-on-year to 29.272 million tons.
The economist added that China is currently in a critical phase of transitioning between old and new growth drivers and upgrading its industrial structure. During this process, the overall economy faces pressure while structural differentiation occurs. However, these are transitional challenges. Once the transformation succeeds, particularly by seizing opportunities from the new wave of technological revolution, achieving greater self-reliance in the supply side and more stable reliance on domestic demand, the stability of economic growth will be significantly enhanced.
Pessimists focus on short-term fluctuations, while optimists discern long-term trends. The growth rate is merely a surface indicator. The pace of industrial upgrading, the potential of the vast domestic market, and the capacity to stabilize the global economy represent China's true economic strengths.
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