Economy resilient, stronger momentum ahead

Workers are busy on the intelligent cabinet production line at an enterprise in Lianyungang, Jiangsu province, on June 25. [Si Wei/For China Daily]

First, new growth drivers continued to upgrade manufacturing and optimize the structure of foreign trade. Production of high-tech and high-value-added products accelerated, with their share in exports continuing to increase. In the first half, value-added industrial output of enterprises above designated size grew 5.4 percent year-on-year, while value-added output of high-tech manufacturing rose 13.3 percent, outpacing the same period last year by 3.8 percentage points and accelerating 0.8 percentage point from the first quarter. Production of computers, communication equipment and other electronic products — as well as industrial robots — maintained rapid growth. High-tech manufacturing contributed nearly 40 percent of total industrial growth, gradually becoming a core driver of economic expansion.

The development of new growth drivers also promoted both higher-quality and faster growth in foreign trade. Merchandise exports reached $2.13 trillion in the first half, up 17.6 percent year-on-year, while imports totaled $1.55 trillion, rising 26.6 percent. Exports of mechanical and electrical products surged 24.5 percent, accounting for more than 60 percent of total exports. Driven by the global technology cycle, imports and exports of artificial intelligence-related products, including electronic components, computer parts, optical fiber and cables, grew by around 50 percent year-on-year. AI-related industrial chains, such as integrated circuits and computer components, have become an important pillar supporting export growth. As China continues to increase the supply of innovative products that meet the global trend toward digitalization and green development, it has further consolidated and expanded its diversified overseas markets. Trade with ASEAN, the European Union and Africa all recorded double-digit growth, while trade with Belt and Road partner countries increased by 14.8 percent, accounting for more than half of China's total foreign trade for the first time.

Second, the investment structure continued to improve, with greater emphasis placed on fostering future growth potential and improving people's well-being. Although overall fixed-asset investment growth moderated in the first half, investment in high-tech industries continued to grow steadily, while investment in intellectual property products accelerated further. Investment related to the six networks — water conservancy, new power grids, computing infrastructure, next-generation telecommunications, urban underground utilities and logistics — continued to expand, providing stronger support for long-term development capacity and public well-being.

Third, demand for services consumption grew steadily, while the potential of new forms of consumption continued to be unleashed. As living standards continue to improve, the rising share of services consumption reflects the natural evolution of China's economy and creates broader opportunities for foreign businesses seeking to expand in China. In the first half, retail sales of services increased 5.3 percent year-on-year, while spending on culture, sports and leisure services maintained rapid growth. Holiday travel, cultural performances and inbound tourism all recorded solid increases. At the same time, online, digital and green consumption emerged as new growth areas. Retail sales of high-energy efficiency household appliances continued to expand rapidly, while the retail penetration rate of new energy vehicles exceeded 60 percent for the third consecutive month, highlighting the continued release of new consumption potential.

Growth of value-added industrial output

Looking ahead to the second half, although the external environment still faces considerable uncertainties, China's economy is expected to stabilize and continue improving as the combined effects of existing and incremental policy measures become more fully evident and the transition from traditional to new growth drivers accelerates. The economy has maintained solid momentum in the first half, stabilized in the middle of the year and gained further strength toward year-end. Taking all factors into account, we believe China has the capability to successfully accomplish this year's major economic and social development goals.

First, foreign trade is expected to maintain relatively strong growth and continue providing solid support for economic expansion.

China's comprehensive industrial system, well-coordinated supply chains and highly efficient manufacturing ecosystem — together with the continued upgrading of intelligent and green manufacturing — are steadily strengthening the country's new competitive advantages in international trade. Over the coming period, capital expenditure across global AI-related industrial chains is expected to continue expanding rapidly, supporting faster growth in exports of semiconductors, electronic components and other products. Meanwhile, China's improving industrial competitiveness will further promote exports of high-value-added products. As an important hub of global industrial and supply chains, China's high-tech manufacturing sector has demonstrated strong resilience. It not only provides reliable support for global technological upgrading and product supply, but also creates broader opportunities for trade, investment and technological innovation by expanding domestic demand, deepening industrial upgrading, and fostering the development of the green and digital economies.

Second, new growth drivers are expected to gather stronger momentum and effectively offset adjustment pressure from traditional growth drivers.

New quality productive forces — represented by AI, advanced manufacturing and green energy — are moving from isolated breakthroughs to integrated industrial expansion. The explosive growth in demand for AI computing power is expected to drive further growth in chip sales, while tech companies are accelerating both research and development investment and capacity expansion.

Meanwhile, the deep integration of the digital economy with the real economy is expected to sustain rapid growth in emerging sectors such as industrial robotics, cloud computing and the internet of things, thus reshaping the foundation of China's industrial system. As the transition from traditional to new growth drivers accelerates, the contribution of the new economy to overall growth is expected to increase further in the second half, effectively offsetting the adjustment pressure from traditional growth drivers.

Third, the combined effects of existing and incremental policy measures will become more evident, providing strong support for faster growth in domestic demand.

The second half will be a critical period for ensuring policy implementation and accelerating project progress. The entire 800 billion yuan ($118 billion) allocated for major national strategies and security capacity-building projects, together with the 200 billion yuan earmarked for large-scale equipment upgrades and consumer goods trade-in programs, has already been distributed and is expected to generate more tangible investment and economic activity.

Investment related to the above-mentioned six networks will continue to expand. Closely linked to improving people's well-being and strengthening long-term development capacity, investment in these six networks is expected to exceed 7 trillion yuan this year, making them a key pillar for stabilizing economic growth.

On the consumption side, measures such as raising the minimum wage, increasing pension payments and expanding medical insurance subsidies are expected to boost consumer confidence at the source. As existing policy funds are put into use more quickly and incremental policy measures are implemented with greater precision, domestic demand is expected to make a steadily larger contribution to economic growth, providing strong support for accomplishing this year's development goals.

The writer is director of the Department of Economic System Reform at the Institute of Economics, Chinese Academy of Social Sciences.