China's new economy picking up steam amid steady growth

BEIJING — China on Monday reported steady growth of 6.9 percent for the first half of 2017, though the figure was overshadowed by reform progress and performance in new economic sectors.

Consumption and service, together with the innovation-driven new economic sectors, are taking up larger roles in the economy, according to data from the National Bureau of Statistics (NBS).

New economic sectors

The high-tech and equipment manufacturing sectors are leading the country's industrial growth, with year-on-year output increases of 13.1 percent and 11.5 percent in the first half, respectively, compared with a 6.9 percent rise in overall output.

"New economic strength is on the rise," said Xing Zhihong, a spokesperson with the NBS.

In the first six months, up to 45.6 percent of the total industrial investment went into technological improvement, paving way for future industrial upgrades, according to Xing.

Online sales of physical goods, one of China's major new business patterns, rose 28.6 percent to 2.37 trillion yuan (about $350 billion), accounting for 13.8 percent of the country's total retail sales.

An NBS survey into China's 40,000 small and micro-firms, crucial businesses in the country's pursuit of new and inclusive economic growth, showed that the business climate index of these firms reached a two-year high of 96.5 percent in the second quarter.

Wu Yibing, joint head of China of Singapore investment firm Temasek Holdings, told Xinhua that his company wanted to increase investment in China's new economic sectors as Temasek was optimistic about China's ongoing economic transition.

He named a few new economic sectors which he described as "very attractive," including high-tech, non-banking finance, life science and consumption.

"Investment into these industries has witnessed better performance than the company's overall investment portfolio," he said.

New growth engines

Progress is also being made in the country's supply-side structural reform and growth engine shift, according to the NBS.

The service sector, already accounting for 54.1 percent of the overall economy, expanded 7.7 percent year-on-year in the first half, outpacing a 3.5 percent increase in primary industries and 6.4 percent in secondary industries, NBS data showed.

In the same period, the contribution of domestic demand to GDP growth reached 96.1 percent, 0.3 percentage points higher than the first quarter level, a trend much in line with China's efforts in growth model shift.

Meanwhile, industrial capacity utilization stood at 76.4 percent in the first half, up 3.4 percentage points from a year ago.

In terms of de-stocking in the property market, the floor space of unsold homes were down 9.6 percent at the end of June.

Growth in property development investment continued to decelerate to 8.5 percent in Jan.-June, down from 8.8 percent during the first five months, adding to evidence that China's property market is running out of steam amid government cooling measures to quash potential asset bubbles.

Better growth outlook

The ongoing economic transition and structural reform sparked optimism on China's future growth outlook.

"China's economy is operating within a reasonable range, maintaining stable, coordinated and sustainable development, laying a solid foundation for achieving the annual target," Xing said.

In the second quarter, GDP growth was steady at 6.9 percent year-on-year, flat from the first quarter, but well above the government's annual growth target of 6.5 percent.

Looking ahead, Xing said more positive changes were on the way and that the firming would be consolidated by improvement in the real economy and expansion of both external and domestic demand.

During a two-day National Financial Work Conference that ended Saturday, China unveiled reform plans to improve the financial sector's capabilities to serve the real economy while guarding against systemic risks.

Nomura Securities said in a report after Monday's data release that given the data, it was raising the forecast for the third-quarter growth to 6.8 percent from the previous 6.6 percent, and the annual growth forecast to 6.8 percent from 6.7 percent.

The forecast of a gradual growth slowdown due to a weakening property sector, possible moderation of domestic demand as well as uncertainties over external demand remained valid, the report said.