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Strong Economic Data from China

China’s gross domestic product (GDP) grew 5.5 percent year on year in the first half of 2023, data from the National Bureau of Statistics (NBS) showed Monday.

China’s GDP reached 59.3 trillion yuan (about 8.3 trillion U.S. dollars) in the first half, NBS data showed.

In the second quarter, the country’s GDP expanded 6.3 percent year on year, according to the NBS.

China’s value-added industrial output, an important economic indicator, went up 3.8 percent year on year in the first half of this year, data from the National Bureau of Statistics (NBS) showed Monday.

In June alone, industrial output rose 4.4 percent year on year, faster than the 3.5-percent growth registered in May, according to the NBS.

The industrial output is used to measure the activity of large enterprises each with an annual main business turnover of at least 20 million yuan (about 2.8 million U.S. dollars). 

China’s power generation climbed 3.8 percent year on year in the first half of this year, official data showed on Monday.

The country’s total power generation reached nearly 4.17 trillion kilowatt-hours during the January-June period, according to the National Bureau of Statistics (NBS).

A breakdown of the data showed growth in the output of thermal power, nuclear power, wind power and solar power, up 7.5 percent, 6.5 percent, 16 percent and 7.4 percent year on year, respectively, during the period, the NBS data showed.

However, the country’s hydropower output fell 22.9 percent from a year earlier in the first six months of the year.

In June alone, the country’s power output expanded 2.8 percent from one year ago, according to the NBS.

China’s new energy vehicle (NEV) sector has entered a new stage of high-quality development, marked by a steady increase in output, sales, exports, and consumption potential.

The country has seen its NEV output growing exponentially. The 20 millionth NEV rolled off the production line on July 3 in the southern Chinese city of Guangzhou, marking a milestone for the sector. The accumulative NEV output only exceeded 10 million units in February last year.

In the first half of 2023, the NEV output expanded 42.4 percent year on year to nearly 3.79 million units, while the NEV sales surged 44.1 percent year on year to almost 3.75 million units, data from the China Association of Automobile Manufacturers showed.

The country exported 534,000 NEVs during the same period, expanding 160 percent from a year earlier.

BYD, one of China’s fastest-growing electric vehicle makers, has exported its automobiles to over 70 countries and regions.

China’s NEV sector is gaining a competitive edge in scale and quality, and the Chinese-branded vehicles exported are cost-effective, said Zhu Yifang, a researcher at the automotive strategy and policy research center under the China Automotive Technology and Research Center Co., Ltd.

Building on the robust growth momentum, China has stepped up policy support in the NEV sector, particularly in its vast rural areas.

In May, China released a guideline to support people living in rural areas to purchase NEVs, focusing on boosting the construction of charging infrastructure.

To further unleash the domestic consumption potential, China extended its preferential purchase tax policy for NEVs to the end of 2027.

Preliminary estimates show the policy will result in 520 billion yuan (about 72.91 billion U.S. dollars) in tax exemptions and reductions.

Infrastructure, including charging facilities, has also seen a notable improvement in recent years.

The number of charging piles has increased from less than 100,000 in 2015 to 5.21 million in 2022. By the end of May this year, China’s charging piles reached nearly 6.36 million.

As of the end of 2022, there were 226 vehicles per 1,000 people in China, and many families had never owned a car. The auto market still has massive room for growth, said Fu Bingfeng, executive vice president and secretary general of the China Association of Automobile Manufacturers.

With NEVs becoming more popular among Chinese consumers, third- and fourth-tier cities and rural areas may record faster market growth, Fu said, adding that the number of vehicles per 1,000 people will likely reach 400 in the future.

The NEV sector has entered a new stage of large-scale, globalized, and high-quality development, becoming an important part of China’s modern industrial system, said Fu. 

Shayne Heffernan

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.