The Chinese economy has demonstrated a “better-than-expected” upturn in the first half of this year, but it’s still too early to say whether the economy will spiral upward, said Ma Guangyuan, a renowned economist, writing for
The Beijing News.
China’s GDP has reported a 6.9 percent growth for the first half of this year. The volume of private investment, a reflection of Chinese entrepreneurs’ confidence in local economy, has achieved a strong recovery after a sharp fall last year. Capital outflow and the depreciation of the Chinese yuan have also improved, according to Ma.
However, to judge whether the Chinese economy is already at the threshold of an upward spiral needs more than short-term statistics, Ma said. It should be evaluated from the perspective of supply-side reform, namely economic structure optimization and the emergence of new impetuses for growth, according to Ma.
The Chinese economy already appears to be driven by a series of new engines such as high-end manufacturing, high-end consumption and emerging industries, Ma said. Consumption, in particular, has been the strongest engine behind China’s economic growth for years, he added.
But it also needs be seen that in the first half of this year traditional growth momentums such as real estate and infrastructure investment have also played significant roles, Ma noted. As the government vows to continue to regulate the real estate market, the sector’s growth is very likely to slow down toward the end of the year, he said.
While China should carry forward supply-side reform in the long run, the country’s economic theme for the short term would be to prevent risks, which include real estate bubbles, any weakening of local entrepreneurs’ confidence, capital outflow from the real to virtual economy and companies’ debt leverage, Ma said. With these risks alive, it would be apparently overly optimistic to say that Chinese economic growth has already touched the bottom of the curve, he said.