Supply-side reform leads to economic resilience

China's GDP grew 6.6 percent in 2018, according to National Bureau of Statistics data. Despite the slight slowdown in the GDP growth rate, however, exports grew at a relatively high 9.9 percent year-on-year calculated in US dollars. And, not surprisingly, China's trade surplus with the United States expanded further.

Apparently, the Sino-US trade dispute is yet to have a visible impact on China's economy. Perhaps the fact that the trade dispute has prompted many importers to place advance orders - as they fear things could take a turn for the worse - has increased export growth. Which means the periodically downward pressure the economy faced last year mainly came from internal sources, especially the slowdown of investment growth.

Due to these factors, the profit growth rate of industrial enterprises has remained high. In the first 11 months of last year, the profits of industrial enterprises above designated size (those with annual sales of more than 5 million yuan, or $744,371) increased 11.8 percent year-on-year. It should be noticed that due to structural differentiation in industrial enterprises above designated size, the ratio of State-owned enterprises has increased, and the number of unprofitable enterprises risen remarkably.