H1 GDP data may surpass preset annual target: economists
More efforts should be put on expanding demand, boosting consumption in second half
Published: Jul 08, 2024 07:38 PM
A scene of Lianyungang Port in Jiangsu, China Photo: VCG

A scene of Lianyungang Port in Jiangsu, China Photo: VCG

The Chinese economy may post a faster-than-5-percent growth rate for the first half of the year, exceeding a preset annual target, according to predictions made by a number of Chinese economists on Monday. A growth rate in the range of 5.1-5.4 percent was predicted for the second quarter.

The predictions came as China is scheduled to post its first-half and second-quarter GDP data in mid-July. In March, China set its 2024 GDP growth target at around 5 percent.

Amid an ongoing correction of the property sector and global protectionist headwinds, some foreign banks have highlighted the downward pressure faced by the Chinese economy.

Analysts at ANZ predicted China's second-quarter GDP may dip below 5 percent to 4.9 percent, citing weak consumer confidence and domestic demand.

However, chief economists from five Chinese brokerages and banks have predicted that China's second-quarter GDP could still reach 5.1 percent, which will put the first-half GDP figure higher than the preset annual target, according to the Securities Daily on Monday.
These economists noted that it is vital for the Chinese government to continue to expand supportive policies to shore up consumption and domestic demand in the second half to keep GDP growth momentum.

Lian Ping, director and chief economist of the Guangkai Chief Industry Research Institute, told the Global Times on Monday that GDP growth in the second quarter may slow from that of first quarter, during which a growth rate of 5.3 percent laid a solid foundation to realize the whole-year target. Growth for the April-June quarter could be around 5 percent, Lian predicted.
Wen Bin, chief economist at China Minsheng Bank, predicted 5.1 percent growth for the second quarter, and that the first-half data will settle at around 5.2 percent, which is higher than the preset whole-year target of 5 percent.

In the second half, the intensity of policy support is expected to be ratcheted up further, with fiscal and monetary policies acting more in unison, Wen told the Global Times on Monday, noting that consumption will accelerate from the low base seen in the same period in 2023.

Other analysts give a more optimistic forecast.

Li Chang'an, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Monday that a number of supportive policies were carried out during the second quarter, such as those shoring up the property sector. Li predicted the second-quarter GDP reading will be 5.3 percent.

GDP growth in the second quarter may further accelerate due to strong exports and a low base, said Zhou Maohua, a macroeconomist at China Everbright Bank. Zhou predicted GDP growth for the April-June quarter at 5.4 percent.

"Overall, the supply side is recovering faster than the demand side in the first half, while in the second half efforts should be put into the effective implementation of the supportive policies already rolled out in the second quarter," Zhou told the Global Times on Monday. The dividends from a comprehensive approach in supportive policies, from cuts in taxes and fees to channeling more funds into the real economy, will continue to manifest in the second half, Zhou said.

Analysts interviewed by the Global Times on Monday noted that the upcoming third plenary session of the 20th Communist Party of China Central Committee in mid-July will serve as a barometer to see how policymakers press ahead with comprehensively deepening reform and further shoring up the vitality of the real economy.
Economists said the implementation of funds raised by the issuance of ultra-long special treasury bond and further promotion of equipment upgrades and trade-in programs of consumer goods will underpin growth in the second half.

Li said the third plenum is set to draw a clear path for high-quality development, and new ideas provided by the plenum stand to further boost efforts to expand domestic demand and invigorate consumption.

Lian noted that given the appropriate supportive policies, the economy stands a good chance of further recovery in the second half of the year. "Although demand will remain relatively weak in general, improvements should be expected along with overall economic recovery and improvement in employment," Lian said.

The summer vacation and the National Day holidays in October will be highlights driving consumption growth in the second half of the year, with the creation of more scenarios for consumption. 

On June 24, the National Development and Reform Commission, the country's top economic planner, and four other government bodies issued a circular calling for fostering consumption scenarios in multiple sectors, including tourism, automobiles and electronics, aiming to boost consumer demand and promote the steady growth of consumption.
The circular called for measures to encourage Chinese cities with restrictions on vehicle purchases to ease these limitations and provide additional quotas for vehicle purchases and support the consumption of new-generation high-tech electronics such as smart wearable devices and AI-powered humanoid robots.

According to the Ministry of Public Security, the number of newly registered new-energy vehicles reached 4.397 million units in the first six months of this year, up 39.41 percent year-on-year and setting a new record.
With exports continuing to demonstrate resilience and intensified policy support further expanding domestic demand, Wen predicted that whole-year GDP could reach around 5.1 percent.