Economists say H1 GDP likely to top 5%

Employees work at an electrical machinery manufacturer in Haian, Jiangsu province. (ZHAI HUIYONG/XINHUA)

China's economy will likely expand by over 5 percent in the first half of this year amid strong policy stimulus, robust industrial production, and stable external demand, providing a solid base for achieving its annual growth target of around 5 percent, economists said on Monday.

Looking into the second half of the year, they said the economy is on track for stable growth thanks to the strong manufacturing performance, resilience in exports, and stepped-up macroeconomic policy support.

Meanwhile, they cautioned of the pressures from lackluster domestic demand and mounting external uncertainties, saying stronger fiscal stimulus measures will be key to tackling the issues faced by the economy and more efforts should be made to boost private investment, spur consumption, and further stabilize the property market.

"China's economy has made a good start at the beginning of the year and the economy has continued the recovery trend in the first half of 2024," said Wen Bin, chief economist at China Minsheng Bank. "China's economy will likely grow by around 5.2 percent in the first half, followed by a 4.9 percent growth in the third quarter and a 5.1 percent increase in the fourth quarter."

His remarks came as the market is eagerly awaiting the release of key economic indicators by the National Bureau of Statistics on July 15.

As the broader economy is still facing pressures from still-weak domestic demand as well as a more complicated and grimmer external environment, Wen said he expects to see more government measures to accelerate infrastructure construction, drive large-scale equipment renewal, and digest existing housing inventories.

"It is advisable to step up fiscal policy support, further deepen reforms, and expand opening-up, which will help strengthen internal driving forces and significantly boost market confidence," he said.

On the monetary front, as the US Federal Reserve is widely tipped to start interest rate cuts in the latter half of 2024, he said any such cuts would create more room for the People's Bank of China, the country's central bank, to ease monetary policy.

China has already announced a series of measures to boost demand, including the issuance of 1 trillion yuan ($138 billion) worth of ultra-long-term special treasury bonds this year as well as driving large-scale equipment renewal and trade-in deals for consumer goods.

"With the gradual stabilization of the endogenous driving force, China's economy will continue the recovery trend," said Li Chao, chief economist at Zheshang Securities. "The country's economic growth rate will likely reach 5.1 percent this year, meeting the annual growth target."

Li's views were echoed by Xiong Yuan, chief economist at Guosheng Securities, who said the second-quarter GDP growth rate will likely be around 5 percent.

"The policy focus is shifting to stabilizing the housing market, boosting demand, and advancing reforms," he said.