China's economy hit the targets set for 2018, and showed strong performance in a number of key areas

By Hu Angang | China Daily | Updated: 2019-01-25

Opinions vary on how to comment on China's economic development as different standards are used to evaluate it. In this article, I'll give my own opinion on China's overall economic development in 2018 based on the major targets proposed by the government in March 2018.

In general, the proposed goals have been fully achieved, and some important indicators have been better than expected.

A significant increase in economic strength China's economy has entered a stage of medium high-speed growth. In 2018, China's GDP growth rate of 6.6 percent was higher than the expected target of 6.5 percent, more than twice the world's average and higher than the average of 4.4 percent in developing countries. Although lower than that of India's growth rate of 7.4 percent and China's growth rate of 6.9 percent last year, the rate is still among the highest in the world.

China's economic aggregate exceeds 90 trillion yuan ($13 trillion), accounting for more than 16 percent of the world's total and it has become the second-largest economy in terms of exchange rate. The Chinese economy accounts for 18.8 percent of the world output (measured on a purchasing-power-parity basis of 2011) - more than the United State's 15.1 percent and the European Union's 16.2 percent. The Chinese economy has contributed about one-third of the global economic growth from 2010 to 2018 - more than four times the EU's share of 7.9 percent and three-times the US' 10.1 percent. No matter how you slice it, China remains the world's major economic growth engine.

Super buyers are super winners

Besides, China continues to be the world's largest trader in goods. This has become a substantial component of China's economic strength. Especially since China is willing to increase its imports, becoming the world's second-largest importer, which will largely stimulate China moving closer to the center stage of the world. As the result of economic globalization and regional integration, super buyers are super winners.

In 2018, the Chinese government continued to lower tariffs and restrictions on cross-border e-commerce. The total value of China's imports and exports of goods exceeded 30 trillion yuan, a year-on-year increase of 12.6 percent, larger than 3.8 percent of the world average. In it, imports topped $2 trillion, a year-on-year increase of 12.9 percent, making China the world's second-largest import market. Meanwhile, its trade surplus narrowed to 16.2 percent, the lowest since 2013, and it completed the "balance of payments equilibrium" target. As China strives to improve its import conditions, the bullish potential of the buying power associated with the Chinese market is being continuously released, with the aim of it becoming the world's largest importer and making greater contributions to mankind.

Low inflation and low unemployment rates

In 2018, the rise in consumer prices were kept below 2.1 percent, lower than the expected 3.0 percent. Despite the economic downturn, it is estimated that the number of newly created urban jobs exceed 13.6 million, including over 8 million college graduates and 5 million secondary vocational school graduates, equivalent to 37.5 percent of the world's new jobs. As a result, China has become the world's largest job creator.

The surveyed urban unemployment rate was within 5 percent, lower than the expected target of 5.5 percent, and the registered urban unemployment rate was within 4 percent, lower than the expected 4.5 percent. At the same time, a record low unemployment rate was set against the background of low inflation, which breaks the inverse relationship between inflation and unemployment described by the Phillips Curve.

Steady growth of residents' disposable income

In 2018, the country's per capita disposable income grew by about 6.5 percent in real terms. The number of rural residents increased by about 6.6 percent in real terms, higher than that of urban residents (5.6 percent). The number of middle-income groups in China continued to grow, exceeding 400 million, the largest of its kind in the world.

Besides, China lifted a large number of people out of poverty in 2018. According to the rural poverty standard of an income of 2,300 yuan per person per year (unchanged since 2010), more than 10 million people from around 280 poverty-stricken counties were lifted out of poverty, the most around the world. Among them, 2.8 million were relocated to regions with better natural living conditions.

In the past six years, under China's current standards, a total number of 80 million people were lifted out of poverty. That means, each year, the number has been over 10 million, realizing one-fifth of the global poverty reduction target.

More scientifically and technologically driven

In 2018, the total social R&D expenditure was estimated to be 2.15 percent of GDP, close to the total R&D investment of the US, and China boasts 4.18 million researchers, the largest number in the world. Besides, China continues to lead the world in the number of domestic applications for various types of intellectual property rights, and its number of invention patents reached 1.6 million, ranking second in the world.

Besides, breakthroughs have been made in the frontiers of science and technology, such as high-temperature superconductivity in iron-based materials, quantum science, and dark matter detection. Major innovations have also been achieved in high-tech projects of strategic importance, such as manned space flights, deep-sea exploration, supercomputing, and satellite navigation, etc.

Progress in ecological advancement

In the first half of the year, the energy consumption per unit of GDP fell by 3.1 percent year-on-year, exceeding the obligatory targets. It is estimated that the annual energy consumption and water consumption per unit of industrial added value will drop by 3.5 percent and 5 percent respectively year-on-year.

Coal consumption accounted for less than 50 percent of the total energy consumption, and renewable energy utilization was further improved. Production and sales of new energy vehicles exceeded 1.25 million for the first time, accounting for more than half of the world's total. As a result, China has become the world's largest producer and consumer of NEVs for many years in a row.

Emissions of major pollutants continued to fall, including sulfur dioxide and nitrogen oxides, which combined to fall by 3 percent, and chemical oxygen demand fell by 2 percent. Afforestation of over 100 million mu (6.7 million hectares) was completed.

Setting those achievements aside, we also need to be clear-minded that China's economy is also plagued by uncertainties, especially those from outside. On our way forward, both short-term, long-term, cyclical and structural problems occur all the time.

The author is dean of the Institute for Contemporary China Studies and professor of School of Public Policy and Management at Tsinghua University.