World analysts see stable Chinese growth despite headwinds

0 Comment(s)Print E-mail Xinhua, July 17, 2019
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China's freshly-released Q2 economic figures have reassured world analysts of the Asian country's sound momentum for growth and its position as a major engine for the world economy amid mounting instabilities.

China's gross domestic product grew at 6.3 percent in H1 year on year, steady from the first quarter, according to a report from the country's National Bureau of Statistics on Monday.

Specifically, China's first and second quarterly growth was 6.4 and 6.2 percent respectively, a slower yet stable performance in line with expectation, which many believe, is already progress in itself.

This rate, a significant decline from a decade ago, in fact registered greater incremental expansion since the base today is 182 percent larger, said Andy Rothman, investment strategist at San Francisco-based investment firm Matthews Asia in an article published Monday. "As a result, opportunities for companies and investors are greater at the currently slower growth rates."

Christian Rusche, economist for industrial organization and competition at the German Economic Institute hailed this over-6 percent growth rate as "positive," considering that it was achieved in a context marked by "ongoing U.S.-China trade frictions, uncertainties over Brexit and conflicts in the Persian Gulf," which could exert a "negative impact on the economy."

Thiess Petersen, senior economic expert at the Gueterslohe-based Bertelsmann Foundation believed that "China's share of global GDP will continue to rise," for its economy is "still showing a considerably higher growth rate than the developed industrial nations."

The 6.2-percent Q2 performance, though weaker than Q1 nominally, was in fact higher if calculated by the sequential annualized growth rate preferred by Japan and several other major developed countries according to a Nikkei analysis.

Other indicators also speak to a positive change in the Chinese economy last month, such as remarkable services sector growth and a 1.3 percentage point higher increase rate for the output growth of industries with annual revenue of 20 million yuan or more (about 3 million U.S. dollars) from their main business.

These indicators in June have outperformed market expectations, indicating that the Chinese economy is running stable in general, said Phil Flynn, senior market analyst at United States-based Price Futures Group.

Analysts believed that growth is back in the cards for China, which has managed to avert a deeper slowdown with resilient domestic services.

China's services sector has registered robust growth with stronger domestic demand, said James Laurenceson, acting director of Australia-China Relations Institute at the University of Technology Sydney.

A slowdown is well within expectation in such a transitional period in which China is restructuring and upgrading its trade structure, said Alexey Maslov, head of the School of Asian Studies at Russia's National Research University -- Higher School of Economics.

A series of measures implemented by the Chinese government, such as dramatic tax and fee cuts and back-up for high-tech companies have helped to revitalize the domestic market and bolster economic growth, Maslov said.

Investment strategist Rothman said China's domestic consumption and services, the bulk of the economy, remain healthy to stabilize employment despite sluggish growth in manufacturing, investment and export.

Moreover, the Chinese goverment seems prepared to handle the slowdown and prudently shuns stimulative monetary and fiscal policies, he added.

Despite dual anxieties from the trade frictions with the United States and from the "Chinese government's ongoing campaign to reduce risks in the financial system," the "Chinese consumers aren't very worried ... because this is the eighth consecutive year in which the (tertiary) services and consumption sector is the largest part of GDP," he noted.

Nominal retail sales remain healthy, income growth is robust, and the growth for per capita disposable income keeps almost flat year-on-year.

"China remains, in my view, the world's best consumer story," Rothman said.

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