Chinese officials announced on Monday that China’s economy expanded by 6.3 percent year-on-year in the second quarter of 2023. The growth rate, while positive, fell short of high expectations from both domestic and overseas institutes. This has led to concerns about the momentum of China’s recovery and pessimistic forecasts for future growth.
Acknowledging the challenges posed by the complex global political and economic situation, Chinese officials and analysts maintained confidence in the recovery trend. They highlighted the hard-won nature of the growth rate, considering the absence of broad-based stimulus and downward pressure globally and domestically. Chinese authorities affirmed their commitment to utilizing policy tools to ensure a continued pick-up in economic recovery and the achievement of the full-year growth target.
The National Bureau of Statistics (NBS) reported that China’s second quarter GDP grew by 6.3 percent from the previous year, contributing to a 5.5 percent growth in the first half of 2023. The growth rate in the first quarter was 4.5 percent, reflecting China’s successful control of COVID-19 and the subsequent economic recovery.
Fu Linghui, spokesperson for the NBS, emphasized the overall positive direction of the national economy during a press conference. However, he also acknowledged the complexity of the global political and economic situation and the need for a more solid foundation for sustained recovery and development.
The second quarter growth rate of 6.3 percent was achieved on top of a low base in the same period of 2022 when GDP growth was only 0.4 percent due to the impact of the pandemic. Despite falling short of some projections, Chinese officials dismissed claims that the economy has lost momentum, highlighting the faster growth rate of 5.5 percent in the first half compared to the previous year.
Chinese analysts pointed to global downward pressure and sluggish domestic demand in certain areas to explain the slightly lower growth rate. They maintained that the growth rate remained within expectations and emphasized the resilience of the Chinese economy in the absence of broad-based economic stimulus and amid challenges faced by traditional growth drivers like exports and real estate.
Economists emphasized the need for more policy support to stabilize growth and boost expectations. They stressed the importance of strengthening endogenous forces, addressing income growth issues, and implementing fundamental reform measures to restore confidence. Weak private investment was identified as a reflection of negative sentiment and lack of confidence.
Chinese officials acknowledged that challenges will persist, as the recovery process is ongoing. They noted the likelihood of a more complex and severe external environment and pressure on domestic economic development. However, they expressed confidence in achieving the expected goals and tasks of economic and social development for the entire year. China has set a GDP growth target of around 5 percent for 2023, and economists believe it can be met or even exceeded with strong policy stimulus.
To support various sectors, including small businesses, the private sector, the real estate market, and the real economy, Chinese officials have vowed increased policy support. Measures such as fee and tax reductions, increased financing, and meetings with representatives from key industries indicate the government’s commitment to ensuring stable growth. The central bank has also pledged to use policy tools as necessary to address challenges and maintain stable growth in the second half of the year.
Further policy support for sectors like foreign trade and domestic consumption is expected, and officials will hold more press conferences throughout the week to discuss different aspects of the economy. Urgent measures, including the removal of administrative restrictions on consumption, are recommended, and improvements in foreign trade could occur if talks between Chinese and US officials result in eased trade tensions.
China’s Ministry of Commerce has expressed an open and welcoming attitude toward a potential visit by the US Secretary of Commerce, while urging the US to remove additional tariffs on Chinese goods. These developments indicate China’s commitment to maintaining economic stability and promoting international cooperation.