Experts see the economy as stable

China’s economy is likely to stabilize gradually in the third and fourth quarters, as policymakers are set to adopt stimulus measures aimed at stabilizing growth and deepening structural reforms, leading economists said. on Monday.

Consumption will remain a key driver of growth in the remaining months of this year, while the country’s rapid expansion of new manufacturing capacity will inject new energy into the economy, they said.

“While the broader economy faces several challenges at home and abroad, the country’s strengthened measures to deepen reforms, boost demand and support private sector development will help fuel economic growth for the rest of the year,” said Chen Wenling, chief economist at the China Institute of International Economic Exchange in Beijing.

Speaking about the issuance of special long-term treasury bonds, he said this step will increase domestic demand as the funds collected will be used mainly to support the implementation of the country’s major policies, building security capabilities in key areas and driving. multi-tool renewal and consumer goods trading programs.

Chen also highlighted the country’s rapid progress in promoting new manufacturing capacity, especially the large growth of the “three new” high-tech and green products, saying that it will introduce ts’ a strong influence on the world’s second largest economy.

Exports of the “new three” – electric vehicles, lithium-ion batteries and solar cells – have registered an annual increase of almost 30 percent in 2023, said the General Administration of Customs .

When it comes to the traditional “troika” that fuels China’s economic growth – exports, investment and consumption – Chen believes that increased consumption will be the main driver. boosting China’s economic growth.

Figures released by the National Bureau of Statistics showed that China’s retail sales, a key measure of consumer spending, increased by 2.7 percent year-on-year in July, from growth of 2 percent in June. Annual growth from January to July was 3.5 percent.

“The reason for the rapid growth of retail sales is not only due to the low base but also the continuous expansion of new types of consumption, with digital, green and healthy consumption becoming new trends ,” said Chang Haizhong, executive director of the cooperative. in the Fitch Bohua area.

In July, sales of communication equipment, sports and entertainment products, and electric vehicles increased by 12.7 percent, 10.7 percent, and 36.9 percent year-on-year, respectively. respectively, NBS data showed.

Late last month, China announced that it would allocate about 300 billion yuan ($42 billion) in long-term treasury bonds to support infrastructure development. growth and trade agreements for consumer goods.

“That is expected to eventually promote an increase in consumption of more than 600 billion yuan, driving the growth of the total sales volume in the second half of the year,” said Chang.

Last month, the People’s Bank of China, the country’s central bank, cut the interest rate on seven-day repurchase agreements – which serve as a short-term interest rate policy – to from 1.8 percent to 1.7 percent.

The seven-day reverse repo is a central bank’s tool to raise funds. The move showed a strong commitment by policymakers to strengthen support for macroeconomic policies, experts said.

Looking ahead, Louise Loo, a leading economist at British think tank Oxford Economics, said her group expects to see further rate cuts by the PBOC over the next two quarters, and a correction continuous demand-side easing monetary policy, including indicators. from the recent meeting of the Political Bureau of the Central Committee of the Communist Party of China to increase household incomes through multiple channels.