China economy grows 6.8% in first 6 months

China's economy extended its steady growth, expanding higher than expected by 6.8 percent year on year in the first half of 2018.

China’s economy extended its steady growth, expanding higher than expected by 6.8 percent year on year in the first half of 2018, data released by the National Bureau of Statistics showed yesterday.

The gross domestic product rose 6.8 percent to 41.9 trillion yuan (US$6.3 trillion) in the first half from the same period of last year, the bureau said. The economic growth in the first quarter was 6.8 percent, and 6.7 percent in the second, thus maintaining a consistent growth of between 6.7 and 6.9 percent in 12 straight quarters.

“Despite the increasing uncertainties from external sources, the Chinese economy rose with the optimization and upgrading of economic structures as well as improvements in quality and efficiency,” said Mao Shengyong, spokesman for the statistics bureau.

The industrial output rose 6.7 percent in the first six months from a year earlier, but was 0.1 percentage points slower than the growth in the first quarter.

The mining industry posted 1.6 percent year-on-year growth in the value-added output; manufacturing rose 6.9 percent; and electricity, heat, gas and water production and supply industry advanced by 10.5 percent.

Output of the high-technology industry and the equipment manufacturing industry grew 11.6 percent and 9.2 percent, respectively, 4.9 percentage points and 2.5 percentage points faster than the overall industrial output growth, indicating optimization of the industrial structure, the bureau said.

The service sector expanded 7.6 percent year on year in the first half, outpacing a 3.2 percent increase in primary industry and 6.1 percent in secondary industry, according to the bureau.

The output of the service sector accounted for 54.3 percent of the total GDP in the first half, 0.3 percentage points higher than the same period of last year, and 13.9 percentage points higher than the industrial sector.

“Also, the contribution from the service sector to the overall economic growth has increased 1.4 percentage points to 60.5 percent from a year earlier, indicating that the services sector is playing an increasingly more important role in the steady economic growth,” Mao said.

Fixed-asset investment grew 6 percent year on year in the first half, lower than 7.5 percent in the first quarter.

Private investment picked up in the January-June period, growing 8.4 percent year on year, which is 1.2 percentage points higher than that of the same period of last year. Meanwhile, fixed-asset investment in high-tech manufacturing displayed particularly strong momentum by growing 13.1 percent.

While noting increasing external uncertainties, Mao said the impact of China-US trade frictions, if any, would have been limited on the Chinese economy in the first half.

The trade frictions, unilaterally stirred up by the United States, have not put much pressure on China’s domestic consumer prices, Mao said.

He expects China’s consumer prices to maintain mild growth in the second half, as the prices of food items including pork and cooking oil, likely to be pushed up by more expensive imported soybeans, are still relatively low.

Meanwhile, it requires further observation to judge the potential impact on the economy in the second half, he said.

“Rising trade protectionism has posed a major challenge to world economic recovery, which has also brought us some challenges and uncertainties,” he said.

The trade war, currently involving US$50 billion, will slow China’s GDP growth by 0.2 percentage points with full consideration of the second and third rounds of the impact of reduced exports on related industries, according to a research team led by central bank economist Ma Jun.

Ma, a member of the monetary policy committee of the People’s Bank of China, added that the trade war would not necessarily have much impact on the capital market and exchange rates.

Mao also highlighted the improvement in employment. The surveyed unemployment rate in urban areas stayed below 5 percent for three straight months, and was 4.8 percent in May and June, which was a record low since the statistics bureau set up the national monthly labor force survey system in 2016. 

The urban surveyed unemployment rate in 31 major cities was 4.7 percent in June, unchanged from a month earlier and down 0.2 percentage points from a year ago.

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