Input: Yu Pin
Source: China Daily editorial | chinadaily.com.cn
China's GDP growth in the first quarter beat market expectations to achieve a 6.4 percent year-on-year expansion, a hard-won result that reflects the country's strenuous efforts to keep the world's second-largest economy on track.
Although it is 0.4 of a percentage point down from the growth in the same period a year ago, the reading was on par with that registered in the fourth quarter of last year, indicating that China's economic slowdown, which the market had feared could continue this year, has been effectively checked, at least for now.
Since last year, China has rolled out a variety of supporting policies, such as tax and fee cuts, increasing funds for infrastructure investment, and targeted monetary easing, to ease the pressure on the corporate sector. These have proved effective, and they have been important factors behind the improving corporate sentiment and steady growth rate.
The growing signs that China and the United States may be ready to reach a deal to end their year-long trade dispute have also bolstered the sentiment of investors and corporate managers, giving another boost that has resulted in the higher-than-expected GDP growth.
The stable performance of the Chinese economy in the first quarter has laid a solid foundation for the country to achieve its whole-year growth target, which is between 6 and 6.5 percent.
The stabilization of China's economy is also of great significance to the world economy, which is facing the challenge of a gradual slowdown. The International Monetary Fund has cut its growth forecast for the world economy this year, highlighting widespread concerns over the prospects of global economic growth.
However, it would be premature to conclude that the Chinese economy has bottomed out, since it does face some challenges. Compared with the first quarter of last year, major indicators, such as industrial output and fixed-asset investment and retail sales growth, have all eased in the first three months, showing that more efforts are needed to improve the economic fundamentals.
The country also needs to properly handle its monetary stance to ensure stable growth while avoiding injecting too much liquidity into the market, in order to prevent asset prices and consumer inflation from surging. The consumer price index rose 2.3 percent year-on-year in March, up from 1.5 percent in February, ringing an alarm bell for policymakers.
The country should also take advantage of the relatively stable state of the economy to continue to press ahead with its supply-side structural reforms and economic opening-up to improve the quality of growth and ensure longer-term sustainability.
The dual task of achieving stable growth and improving the quality of growth will put China to the test this year, especially considering the uncertainties on the external front.