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Technicians check product quality at a mold company in Botou, north China's Hebei Province, Sept. 24, 2025. (Xinhua/Mu Yu)

Building on better-than-expected growth seen in the first half of this year, China's economy showed more signs of marginal monthly improvement in August. Macro policy to shore up economic growth takes hold now, as the government's supportive measures are to ensure full-year economic and social development targets to be met.

The marginal improvement in August was broadly in line with market expectations. Earlier data on business conditions showed the manufacturing purchasing managers' index came in at 49.4 in August, up 0.1 from July. This suggests an improvement in economic activity compared with a month earlier. 

In the first eight months of the year, the growth rates of value-added industrial output for companies above the designated size, the services production index, total retail sales, and goods commerce all stayed on a stable growth trajectory, which proves that the momentum of China's economic growth has remained unchanged.

From the production perspective, industrial output rose by 6.2 percent year-on-year in the first eight months, while the services production index rose by 5.9 percent. Both were higher than last year's growth rates of 5.8 percent and 5.2 percent, respectively. 

Considering that China's GDP expanded by 5.0 percent in 2024, the stronger performance of key economic indicators in the first eight months of this year suggests that GDP growth during this period already surpassed 5 percent. That said, to achieve the annual development goals, some important factors in the coming months deserve attention.

First, export diversification has yielded positive results, providing strong support to China's foreign trade growth. But the global economy continues to slow down. Coupled with the earlier "front-loaded exports" triggered by the US tariffs, China needs to carefully watch marginal changes in its monthly exports and shifts in regional trade structure.

Second, the consumer goods trade-in and other measures to support domestic consumption drove the stronger-than-expected performance in China's consumption in the first half of 2025. However, consumption growth in related categories in upcoming months will require more attention.

Wen Bin Photo: Courtesy of Wen Bin

In late September 2024, China introduced policies that effectively boosted consumer confidence and led to a significant rebound in the economy. This year, however, due to the high base effect, achieving the same targets will undoubtedly need greater efforts.

China has responded swiftly to a spate of changes in global economic horizon, and the government has emphasized the need for proactive policy implementation. Should the pressure on economic growth intensify, stronger counter-cyclical policies should be rolled out in a timely manner.

On August 18, the State Council held its ninth plenary meeting, stressing the importance of consolidating the momentum of economic recovery and staying on the positive development trajectory. The meeting called for enhancing the effectiveness of macroeconomic policy implementation, with a focus on key priorities to strengthen the domestic economy, and leveraging its stability and long-term growth to cushion against global volatilities. 

And, in early September, the Joint Working Group formed by the Ministry of Finance and the People's Bank of China held its second meeting. The two departments engaged in in-depth discussions on financial market operations, government bond issuance management, central bank trading of treasury bonds, and improvement of the mechanism for the offshore issuance of yuan treasury bonds. 

This signals stronger coordination between a country's fiscal and monetary policy. The continued development of China's bond market will ensure better transmission and effectiveness of both fiscal and monetary measures. 

While Chinese economy shows growing signs of marginal improvement and remains on a track of stable growth, China needs to stay vigilant against emerging negative factors. Effective policy coordination and timely adjustment are crucial to sustaining growth momentum in the final months of the year.

The author is chief economist at China Minsheng Bank. bizopinion@globaltimes.com.cn