TO THE POINT: The National Bureau of Statistics released economic data for the first half of 2010 at a press conference on July 15, providing fresh insight into the status of the Chinese economy. The country's GDP surged 11.1 percent in the first six months with investments and consumption holding up well. Hard-hit exports regained some lost ground, drawing strength from the world economic recovery. Meanwhile, inflation remains largely subdued as the CPI grew 2.6 percent. House prices in 70 large and medium-sized cities rose 11.4 percent in June, but economists believe price declines are already on the way.
By HU YUE
China's GDP soared 11.1 percent in the first half of 2010 to reach 17.28 trillion yuan ($2.55 trillion), said the National Bureau of Statistics (NBS).
The Chinese economy has returned to good health while many other countries are still reeling from deep gloom, said Sheng Laiyun, spokesman of the NBS.
It is still necessary for the government to maintain flexible policies and respond to uncertainties ahead, he said.
China enjoyed strong growth rates in early 2010 in part due to a low comparison base last year, said Zuo Xiaolei, chief economist at the Beijing-based China Galaxy Securities Co. Ltd. But now the comparison base has become more demanding.
Ha Jiming, chief economist at the China International Capital Corp. Ltd. agreed. With investments tapering off and bank lending slowing, the economy is bound to lose some steam, he said.
The top priority of the country now is to rebalance the economy and foster consumption as well as the service industry, said Ha.
CPI & PPI
The consumer price index (CPI), a barometer of inflation, rose 2.6 percent year on year in the first half of 2010, well below the 3-percent government-set target for the year. The figure for June stood at 2.9 percent, down from 3.1 percent in May.
The producer price index (PPI), a measure of inflation at the wholesale level, went up 6 percent in the first half. The figure was 6.4 percent in June, 0.7 percentage points lower than May.
Domestic food prices have witnessed an obvious drop in past weeks, relieving some pressure of inflation, said Tang Min, Deputy Director of China Development Research Foundation.
Inflation is likely to remain contained this year by the absence of price pressures globally while a wage-price spiral is unlikely, said the World Bank in a recent report.
In the first half of 2010, China's exports rose 35.2 percent year on year to reach $705.09 billion while imports totaled $649.79 billion, up 52.7 percent, said the General Administration of Customs (GAC). The trade surplus fell by 42.5 percent from a year earlier to $55.3 billion.
The June exports increased 43.9 percent to $137.4 billion while imports stood at $117.37 billion, up 34.1 percent.
From January to June, the European Union and the United States were China's top two trade partners, and Japan replaced the Association of Southeast Asian Nations as the third largest.
The export sector is gaining momentum from the recovering world economy despite the European debt crisis, said Zhu Jianfang, chief economist at the CITIC Securities Co. Ltd.
But the June figure ran up in part because exporters pushed through deals before July 15 when the government removes the tax rebates for six categories of goods including steel and chemicals, said Zhu.
China's urban fixed-asset investment in the first half rose 25 percent year on year to 11.42 trillion yuan ($1.69 trillion), compared with 33.5 percent in the same period last year.
Investments in the property sector totaled 1.97 trillion yuan ($291.5 billion) in the first half, posting a growth rate of 38.1 percent year on year.
With an absence of strong exports, investments have been the biggest engine powering the Chinese economy. But the government has set its sights on clamping down on excessive investments in energy-depleting and high-polluting capacities to steer the economy on a sustainable path of growth.
Newly added loans denominated in renminbi totaled 603.4 billion yuan ($89.06 billion) in June, considerably less than the 639.4 billion yuan ($94.38 billion) in May and 1.53 trillion yuan ($225.83 billion) in June 2009, said the People's Bank of China, the central bank.
The June figure brought the total amount in the first half of this year to 4.63 trillion yuan ($683.39 billion), accounting for nearly 62 percent of the government-set target of 7.5 trillion yuan ($1.1 trillion) for the year.
The commercial banks have slowed their pace of lending as the country gears up to cool inflationary jitters, said Guo Tianyong, Director of the Research Center of China's Banking Industry of the Central University of Finance and Economics.
"Most importantly, mortgage loans are plummeting as the property market loses fizz," he said. "Meanwhile, the government has stepped up its control of the financing vehicles of local governments, putting a dent in hidden bank lending."
Housing prices in 70 large and mediumsized cities grew 11.4 percent year on year in June, 1 percentage point lower than in May. On a monthly basis, June prices in those cities fell 0.1 percent compared with May, said the NBS.
New home prices rose 14.1 percent year on year in June, while those of second-hand homes gained 7.7 percent.
In an attempt to tame property fever, the government initiated a string of austerity measures in April, including higher down payment requirements for second-home purchases and suspension of loans for thirdhome buyers.
The Ministry of Housing and Urban-Rural Development has vowed to continue with the tightening measures and urged local governments to strictly implement them. Efforts will be made to speed up building of affordable houses for low-income residents and strengthen supervision over speculators, said the ministry.
With sales stagnating and property developers under financial pressures, house prices nationwide are set to head south sometime soon, said Zhou Jingtong, a senior researcher with the Bank of China Ltd.
The industrial value-added of stateowned enterprises and non-state enterprises with annual sales above 5 million yuan ($730,000) jumped 17.6 percent in the first six months this year, 10.6 percentage points higher than a year ago.
Retail sales of consumer goods grew 18.2 percent in the first half of the year to 7.2669 trillion yuan ($1.07 trillion).
In the first half of this year, per-capita disposable income for urban residents was 9,757 yuan ($1,440), up 10.2 percent year on year, while per-capita net income for rural residents stood at 3,078 yuan ($454), up 12.6 percent from a year earlier.
China's foreign exchange reserves reached $2.45 trillion at the end of June, up 15.1 percent year on year, said the central bank.
The broad money supply (M2), which covers cash in circulation and all deposits stood at 67.39 trillion yuan ($9.91 trillion) at end June, representing a growth of 18.5 percent year on year, said the central bank.