The Tribune

By Hu Shan,

Chinese Ambassador to the Bahamas

AT the beginning of this year, I introduced through Bahamian mainstream media the working principle of the Chinese government on its economy in 2012, which was “making progress while maintaining stability”. The Chinese government set the GDP growth rate at 7.5 per cent and put forward the working requirements of maintaining “stable growth, price control, structure adjustment and livelihood improvement”.

Now I would like to briefly introduce to local readers China’s current economic situation.

In the past several months, faced with complicated internal and external economic environment, we have stuck to the basic working principle of “making progress while maintaining stability”, and properly handled the relations between economic development, economic structure adjustment and inflation expectation management, resulting in stable and relatively fast economic development.

To be exact, in the first half of this year, compared with the same period of last year, China’s GDP grew at 7.9 per cent, fiscal revenue increased by 12.2 per cent and total volume of exports and imports increased by 8 per cent. The economic growth rate was within China’s expected targets and the overall economic performance has gained the designation of slow yet stable growth.

From the above-mentioned figures, we can see that China’s economic growth rate had slowed down a little bit, so some people are worrying whether China’s economy will risk “double dip” or even a “hard landing”. In my opinion, people don’t have to worry about the growth slowdown or a certain degree of economic decline, for, apart from the impact of the European debt crisis and weak foreign demand, this was mainly the result of the Chinese government’s positive macro-control. In addition, the fundamentals of China’s economy remain unchanged and stable.

The development process of the industrialisation, urbanisation and the service sector shows that there is great potential in the two basic demands of investment and consumption, which will further strongly fuel China’s economic growth.

The government’s macro-control will help ease the pressure of price rise, remove the bottleneck restriction by resources and environment. Moreover, it is conducive to give impetus to the speed-up of structure adjustment, pattern transformation and the promotion of sustainable development.

Today China does not just pursue the economic growth “speed”. However, due to the huge inertia of economic operation, in particular under the current circumstances of world economic depression, it is imperative to be vigilant of the impact that quick economic slowdown might have on employment and enterprise operation, as well as fiscal and financial sectors.

In this regard, China promptly conducted slight anticipatory adjustment and fine-tuning in its macro-control at the end of last year and put forward in explicit terms policy priority in May this year, which was “to place stable growth in a more important position”.

A combination of policies and measures have been functioning: consecutive lowering of reserve requirement rates and benchmark interest, advancing structural tax reduction, strengthening support to small and micro businesses, encouraging private investment, promoting consumption of energy-saving products and starting a number of “12th Five-year Plan” key projects.

In the first half of this year, China braved economic difficulties and hardships in developing its economy and the series of “maintaining stable growth” policies and measures had achieved initial fruits, witnessing a general momentum of slow yet steady macro-economic growth, decline in the degree of price rise and orderly advancement of structural adjustment.

Measures of “maintaining stable growth” have been given full play.

The following data offers a profile of the new trend of China’s economic performance:

• The investment growth rate increased from 20.1 per cent in the first five months of this year to 20.4 per cent in June.

• The increase in fixed asset loans of Chinese enterprises at the end of June was 0.4 per cent higher than at the end of March this year.

• Bank credit accelerated explicitly. A recent report showed that the HSBC PMI of China’s manufacturing sector rose to a five-month high of 49.5 in July.

According to the analysis of the latest data, some new highlights and changes can be seen in China’s economic structure in the first half of this year: thanks to the structural adjustment and technological innovation, China’s overall energy consumption declined by 4.1 per cent; while energy consumption of GDP per capita declined by 3.4 per cent.

Economic figures such as investment, exports and GDP growth rate of the central and western provinces were higher than the national average, and a “wild geese flying” pattern of regional co-ordinated development was formed.

Added value in newly emerging industries and high-tech and new-tech industries saw a growth rate of 12.3 per cent, exceeding the average of enterprises above standard scales by 1.8 per cent.

Industrial structure adjustment was advancing actively.

Recently, Hu Jintao presided over a meeting of Political Bureau of the CPC Central Committee on China’s economic situation and economic work.

At the meeting, he put forward six proposals on the economic work for the second half of the year, requiring profound understanding of and high attention to the outstanding contradictions and problems of China’s economic operation, and putting “maintaining stable growth” as the top priority.

In conclusion, despite the slowdown of China’s economic growth and the arduous internal and external development situation, we can see that the Chinese government and people have the confidence, favourable conditions and strong capability to maintain stable and relatively fast economic development continuously.