mk Suzhou, East China's Jiangsu Province Photo: VCG" src="https://www.globaltimes.cn/Portals/0/attachment/2024/2024-06-20/e9a17900-1dee-467e-bb81-23595e689a03.jpeg" />A view of Taicang Port, Suzhou, East China's Jiangsu Province Photo: VCG
This week, China released its economic data for May, which mostly surpassed previous market expectations.
Notably, domestic consumption and goods export stood out, indicating a sustained recovery and strengthening of the overall macro economy, which showcases the great resilience and future growth potential of China's economy.
Facing an increasingly challenging external environment, China needs to navigate its financial and fiscal policies toward boosting domestic market demand and fostering market vitality.
The data released by the National Bureau of Statistics on Monday showed that gross retail sales in May stood at 3.92 trillion yuan ($540 billion), marking a year-on-year rise of 3.7 percent. The retail spending growth rate has exceeded broad market expectations.
The rebound in home consumption was mainly driven by factors such as the five-day-long May Day holidays, the effectiveness of the policy of trade-in of old for new consumer goods, and the "618" (named after June 18) online shopping festival. The improvement in holiday demand has helped boost domestic consumption.
In the first five months of the year, retail sales grew by 4.1 percent to 19.52 trillion yuan, and online retail sales jumped by 12.4 percent to 5.77 trillion yuan, according to the NBS.
From the perspective of purchasing power, China's labor employment largely stabilized in May, providing a foundation for the recovery of domestic consumption.
The national surveyed urban unemployment rate in May remained at 5 percent. Personal disposable income growth in the first quarter continued to exceed the rate of GDP growth, which was also beneficial for stabilizing the purchasing power.
In addition to the robust growth in domestic consumption, China's export performance has been outstanding, and it was the main driving force behind first-quarter economic growth. Since the beginning of this year, exports have maintained strong growth momentum, driven by the recovery in external market demand.
From January to May, China's exports exceeded $1.4 trillion, up 2.7 percent year-on-year. In May alone, exports totaled $302.35 billion, a rise of 7.6 percent year-on-year.
That was a significant improvement compared with the 1.5-percent increase in the previous month.
The strong performance of exports was not only due to the resilience of external demand, but also relied on the strong competitiveness of China's domestic industries. Supported with strong exports, the Chinese economy has shown a better-than-expected performance.
China's GDP grew by 5.3 percent year-on-year in the first quarter, exceeding expectations even on the basis of a high base seen last year, which is a hard-won achievement.
Considering the low base in the second quarter of last year, it is expected that GDP growth in the second quarter this year will rebound to about 5.5 percent.
Recently, the International Monetary Fund (IMF) stated that the Chinese economy is projected to continue to display its resilience. The IMF raised its growth forecast for China in 2024 from 4.6 percent to 5 percent, and the IMF expressed approval of the policy measures taken by China.
In summary, the economic policies that have been introduced since early 2024 are expected to alleviate the downward risks of the Chinese economy.
The Communist Party of China Central Committee Political Bureau meeting at the end of April called for "adhering to the momentum, avoiding loosening after tightening, effectively consolidating and enhancing the positive trend of economic recovery."
Since May, the issuance of ultra-long special treasury bonds has proceeded as scheduled, and more stimulus measures are implemented to stabilize the real estate market.
These measures have sustained the momentum of economic recovery since the beginning of the year.
The complexity, severity and uncertainty of the external environment could be increasing in the next months, but external demand is likely to continue to show resilience, which will back up China's exports in the second half of the year, while provide a boost to related industrial chains. The positive factors will accumulate and back up China's economic growth.
The author is chief economist at China Minsheng Banking Corp. [email protected]