China’s economy remained broadly stable in July despite external uncertainties and extreme weather, with new growth drivers gaining momentum and economic activity showing signs of continued structural improvement, official data showed on Monday.
The country’s economy showed “resilience and vitality” as proactive macro policies helped cushion external and domestic pressures, National Bureau of Statistics (NBS) spokesperson Fu Linghui told a press conference. He pointed to persistent geopolitical conflicts, uncertainty in global energy markets, and extreme weather as key challenges facing the economy in July.
Industrial output increased 4.5 percent year on year in July, slowing 0.8 percentage points from June. Fu attributed the slowdown to short-term domestic and external factors, while noting that major production indicators remained broadly stable throughout the first seven months.
During the period, industrial output rose 5.3 percent year on year, largely in line with the first-half pace, Fu said, adding that “the overall trend of stable production growth remained unchanged.”
Equipment manufacturing remained a key pillar of industrial growth, with value-added output in computer communication equipment and other electronic equipment, specialized equipment, and electrical machinery rising 19.1 percent, 12.6 percent and 8.8 percent year on year, respectively.
Growth in the three sectors all accelerated from June, reflecting “stronger innovation-driven growth and continued industrial upgrading,” Fu said.
Innovation is driving new growth momentum and improving the economic structure, a trend that continued in July, Fu said. Preliminary estimates showed that new growth drivers accounted for 50.9 percent of the growth in industrial output by major industrial firms in the first seven months, up 3 percentage points from the first half.
AI, notably, is emerging as a key driver in the shift toward new engines of growth. In July, value-added output in AI-related electronic components and equipment manufacturing and intelligent equipment manufacturing rose 24.7 percent and 15.1 percent year on year, respectively, while output of 3D printing equipment surged 65.7 percent.
“Investment in these emerging sectors not only supports current demand but also helps build high-quality supply for future growth,” Fu said.
China’s consumer spending further expanded. Retail sales of consumer goods rose 1.1 percent year on year in the first seven months, with upgraded consumer goods, including communications equipment, cultural and office supplies, and cosmetics, gaining a larger share of total retail sales, Fu said.
Service consumption also continued to gain ground, he noted. Retail sales of services rose 5 percent year on year during the January-July period, outpacing the growth in retail sales of consumer goods by 3.9 percentage points, as consumers shifted from buying goods toward services and experiences.
Fu highlighted the strong spillover effect of service consumption. Tourism, for example, drives spending on dining, accommodation and transportation in addition to travel services. He added that expanding service consumption will remain a key driver of overall consumer spending.
On the job market front, the surveyed urban unemployment rate in China averaged 5.2 percent in the first seven months, unchanged from the same period last year, the NBS data showed.
During the same period, fixed-asset investment fell 6.7 percent year on year in the first seven months, with the decline widening amid extreme weather, external uncertainties and the country’s ongoing economic restructuring, Fu said.
“Investment should not be assessed solely by its growth rate. More attention should be paid to its structure, quality and efficiency,” he said, noting that investment has played an increasingly important role in supporting economic transformation, strengthening infrastructure and improving people’s livelihoods.
“New growth areas are attracting more investment as China accelerates the shift from old growth drivers to new ones,” Fu said. Investment in information services rose 19.2 percent year on year in the first seven months, accelerating 3.7 percentage points from the first half, while investment in integrated circuit manufacturing increased 11.5 percent.
“China’s economy is undergoing positive and profound changes, with innovation playing a growing role in driving growth,” he said, cautioning that the transition to new growth drivers will take time and some sectors still face short-term challenges.
The country’s gross domestic product grew 4.7 percent year on year in the first half of the year. The country is targeting full-year economic growth of about 5 percent this year.
In late July, a meeting of the Political Bureau of the Communist Party of China Central Committee called for timely implementation of pragmatic and effective incremental policies, stronger counter-cyclical adjustments, and efforts to expand domestic demand and optimize supply.
Since August, macro policies have been stepped up, with stronger counter-cyclical monetary policy, faster fiscal spending and greater investment by state-owned enterprises, Wen Bin, chief economist and president of the research institute at China Minsheng Bank, said in a co-authored article.
“With stronger policy support and easing disruptions from extreme weather, major economic indicators are expected to rebound in August,” Wen added.