China still key in driving global growth

China's gross domestic product is expected to reach about 140 trillion yuan ($19.5 trillion) this year, reaffirming the country's role as a major contributor to the world's economic growth, the country's top economic regulator said on Wednesday.

Going forward, the country is poised to place greater emphasis on unlocking the huge potential of its vast and resilient domestic market to underpin continued economic recovery, with stronger policy support to further boost consumer spending and confidence, said officials and economists.

Zheng Shanjie, head of the National Development and Reform Commission, noted that the estimated increase in China's GDP during the 14th Five-Year Plan (2021-25) period — over 35 trillion yuan — is equivalent to the combined economic output of Guangdong, Jiangsu and Shandong provinces, the country's top three provincial economies, and exceeds the GDP of Germany, the world's third-largest economy.

"China's contribution to world economic growth has stayed at around 30 percent (in recent years), and China has managed to maintain an average growth rate of 5.5 percent over the past four years despite numerous shocks," Zheng said at a news conference in Beijing on Wednesday.

Yuan Da, secretary-general of the NDRC, highlighted the huge growth potential of China's ultra-large domestic market, saying that "domestic demand has always been the main driver and stabilizer of China's economy".

China's domestic demand contributed an average of 86.4 percent to the country's economic growth during the past four years, with final consumption contributing 56.2 percent, an increase of 8.6 percentage points compared with the 13th Five-Year Plan (2016-20) period.

"We will place greater emphasis on strengthening domestic circulation, steadfastly implement the strategy of expanding domestic demand, and speed up the development of a comprehensive domestic demand system," Yuan said.

Data from the National Bureau of Statistics showed that China's consumer prices rose for the first time in five months in June, adding to the latest sign of improving consumer sentiment and stable demand. 

The country's consumer price index, the main gauge of inflation, rose 0.1 percent year-on-year in June, up from a 0.1 percent drop in May. The core CPI, which excludes volatile food and energy prices and is deemed a better gauge of the supply-demand relationship, increased 0.7 percent year-on-year in June, NBS data showed.

"Consumer prices rose in June as policies aimed at expanding domestic demand and boosting consumption continued to take effect," said Dong Lijuan, an NBS statistician.

Feng Lin, executive director of the research and development department at Golden Credit Rating International, said government stimulus efforts supported the prices of autos and household appliances, contributing to the CPI uptick in June.

However, with first-half CPI dropping 0.1 percent year-on-year, she cautioned that "price levels remain subdued, with still-weak consumer demand being the primary reason". 

"It also leaves ample policy space for further monetary easing and stronger fiscal stimulus in the second half," Feng added. "That will help cushion the impact of external uncertainties."

Despite facing challenges ahead, Zhang Xiaoyan, associate dean at Tsinghua University's PBC School of Finance, said she believes that China is well-positioned to hit its preset annual growth target of around 5 percent this year, underpinned by robust policy support, strong technological innovation capabilities and a resilient domestic market.

Looking ahead, she said the second-half policy focus will be placed on maintaining stability and boosting market confidence.

Ben Simpfendorfer, a partner at consultancy Oliver Wyman, highlighted the importance of ensuring sustained recovery in consumer confidence, calling for more fiscal spending on education and healthcare and building a stronger social safety net.

To further consolidate the recovery trend, NDRC deputy head Li Chunlin pledged stronger coordination among ministries as well as between the central government and local governments to ensure the completion this year of the 102 key projects mapped out by the 14th Five-Year Plan (2021-25).