SCIO press conference on China's economic performance in H1 2026

Zhonghongwang.com:

The monthly data of China's total retail sales of consumer goods fluctuated in the first half of the year, which has attracted significant market attention. How should we assess the performance of the consumer market in the first half of the year? What is the overall economic outlook for the second half of the year? Thank you.

Mao Shengyong:

Thank you for your questions. As many people have noted, the year-on-year growth rate of total retail sales of consumer goods in May was -0.6%, but this figure rebounded in June, returning positive to a year-on-year growth of 1.0%. To assess China's overall consumption situation, it is important to take a broader view by considering the total volume of retail sales of goods and services, which is a more comprehensive measure of consumption activity. Total retail sales of consumer goods is a long-established indicator, however, its coverage of the services sector remains limited, as it only captures catering services. Looking at overall consumption, market sales, including goods and services, recorded positive growth from January through May.

Regarding the fluctuations in growth rates during the second quarter, what is the outlook for the second half of the year and the year as a whole? First, how should we view the decline in growth in the second quarter? First, although the GDP growth rate in the second quarter eased to 4.3%, down 0.7 percentage point from the first quarter, the fundamentals underpinning China's economy remained unchanged. The moderation in growth in the second quarter compared with the first quarter was mainly attributed to some short-term factors and external influences. For example, the petrochemical industry was affected by certain external factors, while coal production was temporarily affected by domestic factors. Apart from these sectors, other industries operated normally. The fundamentals underpinning stable economic performance, and innovation-driven and high-quality development remain unchanged. Second, in terms of nominal growth, economic growth was stronger in the second quarter than in the first quarter, with a larger increment. The 4.3% GDP growth rate is a figure measured at constant prices. Looking at nominal growth, economic growth was stronger in the second quarter than the first quarter. The nominal GDP in the second quarter increased by 5.9% year on year, which is 1 percentage point higher than the growth rate recorded in the first quarter. GDP increased by 2 trillion yuan in the second quarter, 400 billion yuan more than the increase recorded in the first quarter. In other words, the total GDP in the second quarter of this year was 2 trillion yuan higher than in the same period last year. Compared with an increase of 1.6 trillion yuan in the first quarter over the same period a year earlier, the increase in the second quarter exceeded that of the first quarter. The increase in GDP in the second quarter of this year not only exceeded that in the first quarter, but was also more than 700 billion yuan larger than that recorded in the same period last year, indicating even stronger growth on a nominal basis. Third, the indicators reflecting the performance of new growth drivers remained strong in the second quarter, indicating that the development and expansion of new growth drivers continue. For example, in the second quarter, the equipment manufacturing industry above designated size grew by 9.7%, 0.8 percentage point faster than in the first quarter. The added value of high-tech manufacturing increased by 14%, 1.5 percentage points faster than in the first quarter. Meanwhile, the electronics industry expanded by 14.8% in the first half of the year, with growth reaching 16.1% in the second quarter, 2.5 percentage points higher than in the first quarter. The growth of emerging sectors and new drivers of growth continued to gain momentum, with stronger performance in the second quarter than in the first quarter. Fourth, in the second quarter, the economic performance improved month by month. Indicators such as industrial output, services, imports and exports, and PMI were better in May than in April, and better in June than in May. This indicates that the economy continued to recover in the second quarter. Therefore, the fluctuations in growth rate in the second quarter should be viewed and analyzed in a comprehensive and objective manner.

As for the outlook for the second half of the year and the year as a whole: First, China's economy expanded by 4.7% in the first half of the year, laying a solid foundation for achieving the main projected targets for the whole year, especially the annual growth target. Second, the new growth drivers have directly contributed more than 40% to economic growth and continue to show strong momentum. This momentum is expected to carry into the second half of the year, with new growth drivers continuing to provide strong support for and lead economic development. Third, traditional industries are accelerating their transformation and upgrading. Some sectors that weighed on growth in the second quarter are gradually shaking off short-term impact, and the external headwinds remain limited. These sectors have a certain degree of self-resilience, and are expected to gradually recover in the coming months. Fourth, policy measures continue to take effect. The effects of previously introduced policies will continue to unfold. In light of evolving circumstances, the central government will also introduce more proactive and effective policies in a targeted manner to ensure stable economic performance and promote innovation-driven, high-quality development.

Overall, we have solid foundations and strong support for achieving the major projected targets for the year, especially the expected economic growth target. Thank you.