With galloping GDP rise in Q1, China’s momentum of growth constantly builds up
Published: Apr 16, 2024 07:01 PM
A view of the skyline of Beijing's CBD area. Photo: VCG

A view of the skyline of Beijing's CBD area. Photo: VCG

China's economy has obviously gained more momentum in the first three months of 2024, with the official data showing the gross domestic product (GDP) growing by an impressive 5.3 percent in the first three months over a year earlier, following a 5.2-percent rise in the fourth quarter last year. China has a relatively low inflation and central government debt level, meaning it has sufficient monetary and fiscal policy room to use. The advantages will promote effective qualitative improvement and reasonable quantitative growth of its economy.

The fast growth rate in the first quarter is a good manifestation that the Chinese government's strong macro policy support is beginning to fuel up the economy, which bodes well for a sustainable and steady growth in the coming months. The pace of China's economic recovery has been continuously strengthened since the second half of 2023. Now, with its manufacturing purchasing managers' index rising to 50.8 in April, the economy is running in the fast lane, again.  

It is expected that the low growth base in the second quarter of 2023 will pave way for another spectacular quarterly GDP growth of 5.5 percent or higher in April-June period this year. The State Council's announced GDP growth target of around 5 percent for the whole year, which was approved by the National People's Congress in early March, looks increasingly within reach.

The new data is the best rebuke to the mainstream media in the US and the UK that have kept badmouthing Chinese economy since 2023. Those Western media pundits have constantly forecasted that the world's second largest economy is reaching its "peak", with some going too far by cursing the economy to "collapse" or "crash" or follow the heels of Japan to face the doomsday scenario of "Lost Two Decades."

Unlike Japan, China has proved to be a significantly more creative and innovative country, backed up with a stronger educational system starting from primary schools to colleges, an open, free and highly competitive research and development environment, the Chinese society's distinctive culture of adoring entrepreneurship, and China's mammoth market scale. Those deliberately amplifying the difficulties facing Chinese economy and ignoring the facts and China's enormous growth potential will be disappointed. The boat of Chinese economy is to sail in both sunny and stormy seas. The growth is unlikely to reach its "peak" any time soon. It will not capsize or collapse at all.  

Due to the "scarring effect" of the Covid-19 pandemic, China's economic recovery encountered a bump in the second quarter of 2023 as the property market sales dropped quite unexpectedly, and some of the major developers faced a funding shortage. To inject renewed impetus to rekindle a cooling economy then, the Chinese government promptly moved to reduce benchmark interest rates and the banks' reserve requirement ratio so that more inexpensive loans could go to support business operation and household spending. 

At the same time, the country's fiscal stimulus was also ramped up, with the government issuing additional 2 trillion yuan special treasury bonds in 2023 and 2024 to support running of China's giant economic machine. The government has pledged to issue 1 trillion yuan such bonds in each of the coming years to accelerate economic growth. 

Now, led by a "remarkable growth" in high-end manufacturing as well as rising exports, the economy is showing an encouraging pattern of rapid revival. The country's fixed asset investment, a gauge of expenditures on items including infrastructure, machinery and equipment, rose by 4.5 percent in the first three months, and the value added industrial value expanded by 6.1 percent, and general retail sales, a key measurement of domestic consumer spending, grew by 4.7 percent.

To augment sustainability of the country's growth, the authorities have recently selected a broad range of strategic, emerging industries to get easier terms of financial support, namely information technology, robotics, artificial intelligence, internet of things, connected cars, bio-pharmaceuticals, new materials, advanced equipment and aerospace. Based on these explorations, the resilience of Chinese economy should not be neglected. 

Although the US-led technology restrictions targeting China will continue to act as a roadblock to negatively impact China's growth, the country's blossoming domestic technology innovations, particularly in green new-energy, digital devices and high-end manufacturing, will catapult the country to a new level of strength and competitiveness before 2030.

China is almost certain to remain the largest growth engine for the global economy over the coming 10-20 years, and the country's resolve to achieve around 5 percent GDP growth this year will be realized through the earnest efforts of 1.4 billion Chinese people. If the history is mirror, the perseverance, resilience and creativity of the country will be put into full display, even in the face of global headwinds.

Recently, some international investment banks including Goldman Sachs and Morgan Stanley moved to raise their forecasts for China's economic growth in 2024 to around 5 percent, as they believe the country's vibrant manufacturing sector led by high-tech innovation such as the new-energy solutions and electric vehicles will offset the negative impact caused by a prolonged real estate market correction.

To have a better understanding about the growing trend of China's economy, it is important to grasp its development potential. China's accelerated upgrading of its giant manufacturing sector, agriculture and tech innovation, and its ramped-up efforts to promote high-quality modern services will continue unleashing greater growth potential and contribute to the steady growth of its economy. Eventually, those who predict China's economic demise will fail. 

The author is an editor with the Global Times.