China’s economic growth further optimized in H1

Posted on 20 July 2021

China released all its key economic development data for the first half of 2021 by last week, and related governing organizations also held press conferences to explain the key points of the data on the day of releases where senior officials emphasized the country’s economic growth had been further optimized and is heading towards the desired track via the heavy reliance on the country’s huge domestic market.


For the first half, domestic demand contributed a dominant 80.9% to China’s total GDP growth, according to the data from the National Bureau of Statistics (NBS). Among the positive signs were that the country’s service industry had contributed more to gross domestic product (GDP) growth in H1, calculated at 53%, or up 2.1 percentage points from the first quarter. Manufacturing industries contributed 27.9% to the national GDP, up 1.3 percentage point on year too.

For H1, consumption accounted for 61.7% of the GDP growth, or 42.5 percentage points higher than fixed asset investments, and among the total, the popularity of online shopping of consumer goods among the citizens has been growing, with the value jumping by 16.5% on year on average for the past two years or accounting for 23.7% of the country’s total consumer goods retail revenue.

This boom in e-shopping had also led to rises in logistics services, with the delivery volume over January-June exceeding 50 billion packs – nearly equivalent to the total volume delivered throughout 2018.

Besides, over January-May, industrial enterprises saw their gross profits soar 83.4% on year while profitability improved to 7.11%, or up 2.05 percentage points on year. Capacity utilization among all industries also grew 4 percentage points on year to 78.4% on average, which suggested that the high prices of bulk commodities seen in April-May had yet to seriously dampen their operations. This was probably due to the raw material procurement cycle, especially for those long-term supply deals ahead of the actual production month.

For the rest of the year however, though China’s auto manufacturers will still be struggling with the shortage of auto chips, policy adjustments, and rising costs, according to NBS, the sector still has great potential to expand, due to the fact that car ownership per thousand citizens in China is much lower than in developed economies.

With a solid H1, China’s central government appears rather confident that on-year growth in its Consumer Price Index (CPI) will be kept within 3% on year for 2021, as the country’s Producer Price Index (PPI) is unlikely to jump too much during the rest of this year, given the rather abundant supply and generally active competition among industrial enterprises.

In H1, the country’s CPI grew 0.5% on year, which was very low compared with the 5.1% on-year rise in PPI.

The NBS, thus, made it very clear at its press conference on July 15 that China’s economic growth model has been transformed to high-quality from high-quantity. Beijing’s pledges about reducing carbon emissions, as part of the high-quality development module, thus, will most likely curb the growth in power-intensive and high-emission industries in the short term but in the long run, will also boost demand from new industries such as those active in renewable and clean energies.

Source : Mysteel Global