New drivers of growth set to prove their potential: China Daily editorial

The Chinese economy has gradually entered a stage of restorative growth after the pandemic and will shift to expansionary growth as it gradually returns to a normal track in the second half of this year, driven by industrial upgrading, robust development of the digital economy and the push for a green transition.

That upbeat outlook by Fu Linghui, spokesperson for the National Bureau of Statistics, was included in a report published by Xinhua News Agency on Monday on an economic roundtable it hosted recently.

It is a timely pick-me-up for public sentiment, as the second quarter data released by the NBS on Monday showed the economy grew 0.8 percent in April-June from the previous quarter, on a seasonally adjusted basis, which is indicative of the downward pressure on the economy over the past three months.

Although China's GDP growth continued its recovery, expanding 6.3 percent year-on-year in the second quarter, compared with the 4.5 percent in the first three months of the year and higher than that of most major economies in the world, the low base for that growth due to the impacts of the novel coronavirus pandemic last year must be taken into account. Plus, the growth rate of the second quarter was well below the 7.3 percent growth forecast.

Still that was a hard-earned result given the tremendous uncertainties and difficulties the economy has faced, and testifies to the adept and agile macro control of the government in response to the new normal of weaker domestic and foreign demand.

In a sign of this, and giving substance to Fu's confidence, sales of new energy vehicles in China exceeded 3 million units in the first half of this year, displaying a growth rate of over 30 percent. The outstanding performance of China's NEV industry, which has become a highlight of the country's upgraded economic development in the past two years, proves the effectiveness of key industrial policies implemented in recent years.

As outlined at a State Council executive meeting on the economy held in Beijing on July 6, more flexible macroeconomic policies are needed in the second half of the year to spur the expansion of effective demand, strengthen and optimize the real economy, and prevent and overcome risks in key fields. These policies should take into account both supply and demand, address the present issues and look to attain a better future, while coordinating development with security concerns.

It is expected that the macroeconomic policies will become better targeted in the second half of the year to help the economy effectively manage and control the risks and uncertainties, particularly the local government debt problem, while ensuring the upgrading of the industries and restructuring of the economy unimpeded.

At the same time, investment in infrastructure and manufacturing will gradually help expand domestic demand and stimulate economic growth. And as the production and demand cycles become smoother, residents' consumption willingness and confidence are expected to stabilize and increase. That will consolidate domestic demand as a sustainable driving force for development.