At a time when most economies are grappling with the specter of recession, the Chinese economy has bucked the trend.
China's GDP registered 3.2 percent growth year on year in the second quarter (Q2) of the year, climbing out of a record 6.8-percent contraction in the first quarter due to the global outbreak of the novel coronavirus disease (COVID-19) and surpassing all recovery expectations. The GDP stands at 45.66 trillion yuan ($6.54 trillion) in the first half (H1) of the year, narrowing the year-on-year decline to 1.6 percent, according to the National Bureau of Statistics (NBS).
Why this is an achievement for an economy used to growing at a fast pace for decades was explained by Liu Aihua, NBS spokesperson, at a press conference on July 16.
"As a large developing country with 1.4 billion people, it was not easy for China to put the epidemic under control within a short time, make the national economy shift from slowing down to rising, and maintain stability in social and economic development," she said. "It speaks volumes for China's economic resilience and potential and the effectiveness of policy packages."
Now that the herculean task has been achieved, she said the recovery would serve as a solid foundation for continued growth in the second half of the year.
The International Monetary Fund had already assessed in June in its World Economic Outlook that China was expected to see 1-percent increase for the whole year, which would make it the only economy with positive growth in 2020 when the global growth is projected at minus 4.9 percent.
With the advancement of epidemic prevention and control, China's social and economic development is well on track. Q2 has seen the troika of investment, export and consumption add more fuel to the economic recovery and the main indicators have also shown growth from a sharp decline in Q1, indicating V-shaped growth.
"Investment has a crucial role in the quick rebound in Q2," Xu Hongcai, Deputy Director of the Economic Policy Commission, China Association of Policy Science, told Beijing Review.
According to the NBS, fixed assets investment totaled 28.16 trillion yuan ($4.04 trillion) in H1. Though down 3.1 percent year on year, the decline narrowed by 13 percentage points from Q1. Infrastructure, property, manufacturing and hi-tech were the highlights, growing significantly in Q2.
Pan Xiangdong, chief economist of China Galaxy Securities, attributes the rebound to the completion of work and orders scheduled previously, increase in the capital scale and enhanced efficiency. Besides, the monetary easing policy also promoted investment in property development, Pan told The Economic Observer.
This year, the central government budget for investment together with the general debt budgets of local governments and the special bonds issued by them for infrastructure investment surpassed 5.35 trillion yuan ($765 billion), rising more than 1.67 trillion yuan ($239 billion) over last year. The increased funding for infrastructure will stimulate a 10-percent growth in the sector in H2, according to Zhu Baoliang, chief economist with the State Information Center, a policy think tank affiliated to the National Development and Reform Commission.