The Chinese economy outshined its global peers by securing better-than-expected 7.1-percent economic growth in the first half of 2009.
National Bureau of Statistics (NBS) figures signaled the Chinese economy has bottomed out, as mirrored in remarkable 7.9-percent GDP growth in the second quarter, up from merely 6.1-percent growth in the first quarter of 2009. NBS reported the encouraging first-half economic performance at a press conference held on July 16.
To date, this is one of the most extraordinary economic achievements globally. The global financial crisis has wreaked havoc on the world since last year, dragging down worldwide economic performance and throwing major banking and industrial giants into an abyss of misery.
But the Chinese economy, thanks to its conservative financial practices and massive stimulus package, has stayed relatively intact.
Of the three major economic drivers, investment made the biggest contribution to GDP growth, driving it up 6.2 percentage points; consumption ranked second with 3.8 percentage points. Exports, which used to lead economic growth, pulled GDP down 2.9 percentage points, said NBS spokesperson Li Xiaochao.
The first half saw no inflationary pressure as consumer prices dropped a mild 1.1 percent year on year, and producer prices were down 5.9 percent year on year. Consumers have noticed the declining prices of pork, edible oil and clothes.
Stimulus paid off
The quick economic rebound is largely attributed to the 4-trillion-yuan ($586-billion) government stimulus package adopted in November 2008, as well as a series of follow-up measures.
China has also joined a worldwide effort to alleviate economic suffering by passing revitalization plans for 10 industries, including the auto, shipbuilding and light industries.
For instance, the government subsidy for low-emission cars led to a purchasing spree, and China has overtaken the United States to become the biggest auto market in the world with sales of 6.09 million new autos in the first half of this year.
In addition, the Central Government adopted an active fiscal policy and appropriately accommodative monetary policy earlier this year, which suffused the markets with abundant cash.
Backed by strong government stimulus measures, the mainland stock markets, known as a barometer for the economy, rallied in the first half of this year. The benchmark Shanghai Composite Index (SCI) gained 57 percent in the first half and continued to surge in July. During the same time, Shenzhen Component Index grew 78 percent.
The property market also soared as consumers began to buy homes after a six-month wait-and-see period. In Beijing, some property projects sold for more than 30,000 yuan ($4,392) per square meter in June, the highest since the outbreak of the credit crunch.
The economic revival also gave rise to recovered fiscal revenue. In June, fiscal revenue totaled 686.75 billion yuan ($100.5 billion), growing 19.6 percent year on year, the biggest growth so far this year.
The massive government stimulus package spurred individual and corporate investment. In the first half, fixed-asset investment soared 33.5 percent to 9.13 trillion yuan ($1.34 trillion), one of the highest half-year growth rates in the country.
Lucky 8 attainable
Economists at think tanks, investment banks and other financial institutions are upgrading their growth projections for China as evidence mounts that the massive government fiscal and monetary stimulus is likely to result in 8-percent GDP growth.