英文加强内生动力以支持中国经济好转

Strengthening

endogenousdriverstosupportChina’seconomicupturn

August2024

►InH1,China’seconomysawsteadyperformancedespite

adversityamidachangingexternalenvironment.Thegross

domesticproduct(GDP)grewby5%year-on-year(YOY)1andthefundamentalssustainingChina’slong-termgrowthremain

unchanged.

►DespitetheGDPfluctuationinQ2,China’sforeigntrade

sustainedupwardmomentumandthegrowthrateaccelerated

quarterbyquarter.Theindustrialproductionremainedrelativelysteady,andthemanufacturingsectorcontinuedtounderpintheinvestmentdemands.Duetosubduedpurchasingpowerand

confidence,theoverallstrengthofconsumptionmomentumin

Q2wasweakercomparedwiththesameperiodinpreviousyears.Tooptimizeandexpandserviceofferings,thegovernment

introducednewmeasuresinAugusttoencouragelocal

governmentstoexploreopportunitiesintraditionalsectorssuchascatering,housekeepingandelderlycareandpromotegrowth

in“life-enhancingconsumption”and“newtypesofconsumption”.

►China’seconomyisnowatacriticalstageofstructural

transformationandoptimization.Insufficientdomesticdemandappearstobethemajorchallenge,andthefoundationfor

economicrecoverystillneedstobeconsolidated.TheThird

PlenarySessionofthe20thCPCCentralCommittee2highlightedtheimportanceofenhancingtheconsistencyofmacro-policy

orientationandadvancingreformsinkeyareas,aswellastheneedtomitigaterisksrelatedtorealestatesector,local

governmentdebtandsmallandmedium-sizedfinancial

institutionsinacoordinatedmannerwhilemaintainingsteadyeconomicgrowth3.

►Underpinnedbytheimplementationofpreviousmeasures,

proactivefiscalpoliciesareexpectedtofurtherboostinvestmentinH2.Aportfolioofpoliciesincludinglarge-scaleequipment

renewalandgreenandlowcarbondevelopmentwillcontinuetosupportthehigh-end,intelligentandgreentransformationof

traditionalindustries,andboostinvestmentintechnology

transformationandupgrading.Developingnewquality

productiveforcestailoredtolocalconditionsisthekeyto

advanceindustrialupgradingandsustainabledevelopment.

Effortstoboostdomesticdemandwillbefocusedonincreasingpeople’sincome,enhancingpurchasingpowerandwillingnessoflowandmiddle-incomegroupsandexpandingservice

consumption.Exportgrowthispossiblytoremainresilientintheshort-term,however,giventhecomplicatedinternational

economicandtradesituation,Chineseenterprisesincertainsectorsneedtomakeanadaptiveadjustmenttooutflow

destinationsandexportstrategywhileacceleratingtheiroverseasproductioncapacityexpansion.

1.NationalBureauofStatistics(NBS),

/sj/zxfb/202407/t20240715

_1955618.html

2.TheThirdPlenarySessionofthe20thCentralCommitteeoftheCommunistPartyofChina

3.XinhuaNewsAgency,

/politics/leaders/20240718/a41ada3016874

e358d5064bba05eba98/c.html

3

4

China’seconomysawsteadygrowthinH1andinsufficientdomesticdemandappearstobethemajorchallenge

►China’seconomymaintainedamodestexpansioninH1,withGDPgrowingby5%YOYtoRMB61.7trillion.Q2GDPslowedto4.7%YOY,amidfluctuationsinthemanufacturingindustryandconsumptionspending,while

exporthaspickedupsteamagain.

Figure1.ThecontributionofinvestmenttoeconomicgrowthstrengthenedinQ2

10

8

6

4

2

0

(2)

ThreedriversofGDPgrowth

1.01

Percentagepoint,YOY%

1.771.97

1.070.811.241.200.77

1.190.530.831.760.630.63

5.520.080.705.371.88

3.463.784.634.163.91

0.952.372.19

0.250.37

-0.81-1.26-0.28-1.05-0.97-0.16

0.73

3.403.043.02

2021-062021-092021-122022-032022-062022-092022-122023-032023-062023-092023-122024-032024-06

ConsumptionInvestmentNetexports

Source:NationalBureauofStatistics(NBS)

►Theequipmentmanufacturingsectorhasbecomeanimportantengineforprofitgrowthofindustrialenterprises.MultiplesectorspostedgrowthinH1

thankstothepolicyonlarge-scaleequipment

renewal.Inparticular,electronicequipment

manufacturingandautomotivesectorsgrewfaster,up13.3%and9.8%respectively4.Giventheweakerdomesticdemand,thecapacityutilizationrateof

industrialenterprisesabovethedesignatedsize

nationwideroseslightlyto74.9%YOYinQ25,withdestockingpressureremains.

Lookingahead,thepolicyonlarge-scaleequipmentrenewalwillpossiblyprovideeffectivesupportforhigh-end,intelligentandgreenequipment

manufacturingsectorsincludingindustrialrobotsandcomputernumericalcontrolmachinetools.

Meanwhile,enterprisesinrelevantindustriesshouldprioritizecultivatinganddevelopingnewquality

productiveforcestoimprovetheindustrialchainandsupplychainsysteminthefieldsofbatteries,new

energyvehiclesandintegratedcircuits,andfurtheracceleratetheestablishmentof“dualcirculation”

developmentpattern.

4.NBS,

/sj/zxfb/202407/t20240715

_1955596.html

5.NBS,

/sj/zxfb/202407/t20240715

_1955616.html

5

Figure2.TheoverallindustrialoutputremainedstablebutcapacityutilizationrateneedsimprovingIndustrialoutputoverallandkeysegments–cumulativeYOYgrowthrate(%)

40

30

20

10

0

(10)(20)

2021-04

2021-05

2021-06

2021-07

2021-08

2021-09

2021-10

2021-11

2021-12

2022-01

2022-02

2022-03

2022-04

2022-05

2022-06

2022-07

2022-08

2022-09

2022-10

2022-11

2022-12

2023-01

2023-02

2023-03

2023-04

2023-05

2023-06

2023-07

2023-08

2023-09

2023-10

2023-11

2023-12

2024-01

2024-02

2024-03

2024-04

2024-05

2024-06

OverallindustrialoutputManufacturing

Automotivemanufacturing

Electricalmachineryandequipmentmanufacturing

Computer,communicationsandotherelectronicequipmentmanufacturing

Source:NBS

►Duetoweakdomesticdemandandmarginal

slowdownexternally,thepurchasingmanagers’

index(PMI)ofChina’smanufacturingindustry

stoodat49.4%inJuly,stayingbelowtheboom-or-bustlineforthreeconsecutivemonths.Intermsofenterprisesize,thePMIoflargeenterpriseswas

50.5%,up0.4%comparedwiththepreviousmonth,showingastabilizingtrend,whilethePMIof

medium-sizedandsmallenterpriseswas49.4%and46.7%6,down0.4%and0.7%respectivelycomparedwiththepreviousmonth.

Industriesrelatedtonewdrivingforcesmaintainedgrowthmomentum,butthedemandfornewordersintraditionalindustriesfacedchallenges.InH2,

drivenbytheacceleratedeconomicrestructuring,thePMIofhigh-techmanufacturingsectoris

expectedtocontinuetostayintheexpansionrangeandboostsupplyanddemand,however,theongoingadjustmentoftherealestatesectoranditsrelevantimpactsstillneedcloseattention.

Figure3.Thedownwardpressurecontinuedduetodemandcontraction

70

65

60

55

50

45

40

35

30

PMI*（%）

*50%=Beingunchangedcomparedtothepreviousmonth

2021-05

2021-06

2021-07

2021-08

2021-09

2021-10

2021-11

2021-12

2022-01

2022-02

2022-03

2022-04

2022-05

2022-06

2022-07

2022-08

2022-09

2022-10

2022-11

2022-12

2023-01

2023-02

2023-03

2023-04

2023-05

2023-06

2023-07

2023-08

2023-09

2023-10

2023-11

2023-12

2024-01

2024-02

2024-03

2024-04

2024-05

2024-06

2024-07

ManufacturingServicesConstructionHigh-techmanufacturing

Source:NBS

6.NBS,

/sj/zxfb/202407/t20240731

_1955901.html

6

►China’sfixed-assetinvestmentgrewsteadilyinH1,up3.9%YOY,higherthan3.0%growthfortheyearof2023.Specifically,investmentinmanufacturingsectorincreasedby9.5%YOY,contributing57.5%

tothetotalinvestmentgrowth,andinvestmentinhigh-techindustriesgrew10.6%YOY7.InH2,morepoliciesarelikelytobeplacedtoshoreuptherealestatesector,however,therelevantimpactis

expectedtobeadvancedstepbystep.Whethertherealestatemarketwillseestrengthenedrecoverymomentumwilldependonthepolicypaceand

intensity,aswellaswhetherexpectedresidents’incomeisimproved.

Moreover,drivenbytheissuanceofultra-longspecialtreasurybondsandlocalgovernmentspecialbonds,

theinfrastructureinvestmentwilllikelypickupinH2.Policiesonlarge-scaleequipmentrenewalandtrade-in

ofconsumergoodswillcontinuetoboostthe

developmentofautomotivemanufacturingsector,andtheinvestmentintechnologytransformationremainsaspotlightforincrementalinvestmentdemand.This

year,state-ownedenterprisesareacceleratingto

expandingpresenceinnewsectors,especiallyfor

deepeningintegrationofdigitalintelligenceandrealeconomy,theinvestmentinadvancedmanufacturing,energyandelectronicinformationsectorsislikelytogainspeed.

Figure4.Investmentinmanufacturingsectorstayedresilientwhiletherealestatesectorwasstillthemainchallengeontheeconomy

70FAIoverallandkeysegments–cumulativeYOYgrowthrate(%)

60

50

40

30

20

10

0

(10)(20)

OverallFAIHi-tech

——OverallmanufacturingRailway,waterwayandaerospacemanufacturing

AutomotivemanufacturingElectricalmachineryandequipmentmanufacturing

Source:NBS

RealestateInfrastructure

►Theslowdowninincomegrowthledtoweaker

consumptionspending.InJune,totalretailsalesofconsumergoodsgrewby2.0%YOY,down1.7

percentagepointscomparedfromtheprevious

month.Serviceconsumptioncontinuedtogrow

fasterthangoods,specifically,cateringsegment

revenueroseby5.4%YOYandwentup0.4%monthonmonth.Despiteofthestimulateontrade-inof

consumergoods,theconsumptionof

communicationequipmentdroppedfrom16.6%to2.9%inJune,whiletheconsumptionofhouseholdappliancesexperiencedthemostsignificant

decrease,downfrom12.9%to-7.6%8.

Tooptimizeandexpandserviceofferings,theStateCouncilintroducednewguidelinestoadvancehigh-qualityserviceconsumptionon3August.Titled

OpinionsonPromotingtheHigh-QualityDevelopmentofServiceConsumption,theguidelines9encouragelocal

governmentstoexploreopportunitiesintraditional

sectorssuchascatering,housekeeping,andelderly

care.Theyalsopromotegrowthin“life-enhancing

consumption”areaslikeentertainment,tourism,sports,educationandresidentialservices,andaimtoexpand

“newtypesofconsumption”,includingdigital,greenandhealthservices.

7.NBS,

/sj/zxfb/202407/t20240715

_1955618.html

8.NBS,

/sj/zxfb/202407/t20240715

_1955609.html

9.StateCouncil,

/zhengce/zhengceku/202408/content

_6966275.htm

7

Figure5.Thebroadconsumptionrecoveryremainssoftdespitesolidgrowthinservicesector

80

Totalretailsalesofconsumergoods-cumulativeYOYgrowthrate(%)

60

40

20

0

(20)

——Totalretailsalesofconsumergoods——Onlineretailsalesofphysicalgoods——Cateringrevenue

Source:NBS

Figure6.Weakhouseholdconfidenceandsluggishincomecontinuetoweighonconsumptionspending

14

12

10

8

6

4

2

0

Percapitadisposableincomeofurbanresidents—cumulativeYOYgrowthrate（%）

2021-032021-062021-092021-122022-032022-062022-092022-122023-032023-062023-092023-122024-032024-06

Source:NBS

►Theupwardmomentumofforeigntradehasbeenconsolidated,andthestructuraloptimizationhasbeenachieved.In1H,thetotalvalueofChina's

importandexportofgoodsamountedtoRMB21.17trillion,up6.1%YOY10.High-end,intelligentand

environmentallyfriendlyproductsegmentswerethemaindriverofthegrowth.Notably,

electromechanicalproducts,characterizedbytheirhightechnicalsophisticationandaddedvalue,

constitutednearly60%oftotalexports.

Furthermore,theYOYgrowthofprivatesegmentreached11.2%,representing55%ofthetotal

foreigntrade11.

Currently,theglobaleconomyisstillunderrecovery

stage,withgeopoliticaltensionsandtrade

protectionismpersist.Theimpactoftradefriction,particularlythosestemmingfromincreasedtariffs,areyettobefullyassessed.Nevertheless,digitallydeliveredservicetradeisemergingasanewdriverforChina,thankstopolicysupportandthedomesticindustrialdevelopment.Fosteringnewquality

productiveforcesandtechnologicalandexploringnewmarketsareessentialtoimprovetheefficiencyandresilienceofChina’ssupplychain.

10.ChinaCustoms,

/customs/302249/zfxxgk/2799825/302274/302275/5982428/index.html

11.ChinaCustoms,

/a/202407153130628181

.html

8

Figure7.China’sforeigntradeshowsresilienceamidstructuraloptimization

Foreigntrade—CumulativeYoYgrowthrate%

50

40

30

20

10

0

(10)(20)

2021-03

2021-04

2021-05

2021-06

2021-07

2021-08

2021-09

2021-10

2021-11

2021-12

2022-01

2022-02

2022-03

2022-04

2022-05

2022-06

2022-07

2022-08

2022-09

2022-10

2022-11

2022-12

2023-01

2023-02

2023-03

2023-04

2023-05

2023-06

2023-07

2023-08

2023-09

2023-10

2023-11

2023-12

2024-01

2024-02

2024-03

2024-04

2024-05

2024-06

ExportImport

Source:NBS

►ForeigninvestmentinChinaisadvancingalongitstrajectoryinhigh-techandgreenindustries.The

MinistryofCommercereportsthatinH1,theactualuseofforeigncapitalreachedRMB498.91billion

(approximatelyUS$68.63billion),reflectingaYOYdecreaseof29.1%.Nevertheless,duringthesame

period,therewastheestablishmentof26,870newforeign-investedenterprisesacrossthecountry,

markingaYOYincreaseof14.2%.Sector-wise,

foreigndirectinvestment(FDI)inthehigh-tech

manufacturingindustryhasseenanotable

acceleration,risingby2.4percentagepoints

comparedtothesameperiodlastyear.AndFDIin

themanufacturingofmedicalinstrumentsand

apparatus,aswellasinprofessionalandtechnical

services,surgedby87.5%and43.4%,respectively12.

FluctuationsinChina’sinboundFDIarenormalgiventhehighbaselinein2023.Meanwhile,it’sworth

notingthatforeigninvestorsareincreasingly

focusingonhigh-techsectorsandexploring

medium-tolong-termopportunities,particularlyinadvancedmanufacturingandmodernservice

industries,suchasartificialintelligence,healthcareandthedigitaleconomy.

Tofurtherstimulateforeigninvestment,the

ResolutionoftheCentralCommitteeofthe

CommunistPartyofChinaonFurtherDeepeningReformComprehensivelytoAdvanceChinese

Modernization(hereinafterreferredtoasthe

“Resolution”)13explicitlystatestheintentiontofullyeliminaterestrictivemeasuresonforeign

participationinthemanufacturingsector,broadentheopeningoftheserviceindustryandfacilitatethesystematicexpansionofaccessinthe

telecommunications,internet,education,cultureandhealthcaresectors.

Figure8.China'sinboundFDIdeclinedatafasterpacegiventhehighbaselineinpreviousyear

(US$,billions)

InboundFDI,cumulativetotalYOY

(CumulativetotalYoY,%)

200

150

100

50

0

30

20

10

0

(10)(20)(30)(40)

2008

Source:MOC

2009201020112012201320142015201620172018201920202021202220232024

1-6

12.MOF，

/lianbo/bumen/202407/content

_6962790.htm

13.,

/zhengce/202407/content

_6963770.htm

9

Reformservesasacatalystforstabilizinggrowth,facilitatingstructuraladjustmentandmitigatingrisk14

►Giventheincreasinglycomplexexternalenvironment,insufficientdomesticdemandanddivergent

trajectoriesinrecovery,theurgencytostabilize

growthinthelatterhalfoftheyearislikelyto

intensify.Underpinnedbytheimplementationof

previousmeasures,proactivefiscalpoliciesare

expectedtofurtherboostinvestmentinH2.The

introductionoflocalgovernmentspecialbondsand

ultra-longspecialtreasurybondsisexpectedtobolstertheintrinsicmomentumofeconomicdevelopment,

particularlyinsectorssuchashigh-techmanufacturing,consumerelectronicsandsemiconductors.

Additionally,thealignmentofmonetaryandfiscal

policiesmustensureenhancedliquiditysupportfortherealeconomy.Recentadjustmentstointerestrate

policiessinceJuly15indicatethatthecentralbankis

adoptingamorecounter-cyclicalapproach,reinforcingtheseven-dayreversereporateasakeypolicyrate

anchor,whichsuggestsasignificanttransformationinChina’smonetarypolicyregulatoryframeworkinthefuture.

►InH2,thesustainabilityofindustrialgrowthwill

dependonthedemandside.Domestically,the

advancementofnewqualityproductiveforcestailoredtolocalconditionsremainsapriority.Theimpactsof

policiessuchaslarge-scaleequipmentrenewaland

trade-inofconsumergoodshavealreadybeen

partiallyrealizedandareexpectedtobefurther

reinforced,particularlyinsectorssuchas

manufacturinginvestment,automobileconsumption

andtheenhancementofgreenequipment16.While

thereisstillaneedtoimprovehouseholdconsumptionwillingness,thestimulatingmeasuresareexpectedto

yieldpositiveresults.Servicesegmentispoisedtoplayacrucialroleinexpandingandupgradingoverall

consumption.Onthesupplyside,thedevelopmentandnurturingofnewconsumptiondrivers,particularlyin

areassuchastourism,culture,healthcare,elderlycare,anddomesticservices,willseeagradualenhancementthroughtheemergenceofnewformsandmodels,

includingintelligence,sharingandInternetconnectivity.

►Despitetradefriction,theoverallexport

performanceisexpectedtoremainrobustintheshort-termastheproductcategoriesaffectedbythetariffincreaseonlyaccountasmallportionofChina’stotalexport.Lookingahead,Chinese

enterprisesinrelevantsectorsshouldnotonly

expeditetheestablishmentofoverseasproductioncapacitiesbutalsoadapttheirexportstrategies

flexibly.Theyshouldleveragefavorablepolicies,

explorethepotentialofthedomesticmarket,andenhancetechnologicalinnovationtoimprovelong-termcompetitiveness.

►Mitigatingrisksrelatedtorealestatesector,localgovernmentdebt,andsmallandmedium-sized

financialinstitutionswillbethekeyworkingtask

addressedbytheThirdPlenarySessionofthe20thCPCCentralCommittee.Firstly,itisessentialto

fosterapositivecyclebetweenfinanceandreal

estatemarketbyimplementingcity-specificpoliciesthateffectivelycatertotheessentialandenhancedhousingdemands.Secondly,thegovernmentshouldprogressivelyeasetheburdenofdebtrepaymentbydevelopingacomprehensivesetofdebtresolution

strategies,whichmayincludetheissuanceoflong-termtreasurybondsandspecialrefinancingbonds.Shiftingsomeofthefinancialresponsibilitiesand

expendituretothecentralgovernment,meansroomformorecentralgovernmentleveragingtomitigatetheongoingdeleveragingoflocalgovernmentsandstabilizetheaggregatedemand.Lastbutnotleast,adva