China reaps rewards from rebalancing push

PUBLISHED : Thursday, 31 July, 2014, 1:24am
UPDATED : Thursday, 31 July, 2014, 1:24am

The mainland's regional economies enjoyed a revival in growth in the second quarter, data from provincial governments showed, chiming with earlier figures that suggest a burst of government stimulus measures is reinvigorating activity.

Of the 30 regions and provinces that released their local gross domestic product data, 23 reported first-half growth accelerated from the first quarter. About three-quarters posted growth that was higher than the national average of 7.4 per cent in the first six months.

Growth also diverged sharply between eastern and western China. The coastal and northeastern regions fared the worst, while activity was the most buoyant in the central and western areas, where double-digit growth rates were concentrated.

Analysts said this suggested the mainland's bid to rebalance its economy was paying off.

"The growth gap is an expected result of Beijing's efforts to rebalance regional economies and let the fruits of growth be more evenly shared by the poorer inland regions," said Nie Wen, an analyst at Hwabao Trust.

In Hebei, for instance, growth stayed sluggish in the first six months, even though activity picked up to 5.8 per cent from 4.2 per cent in the first quarter.

The drowsy performance is in part due to Hebei's efforts to remake itself. The province wants to slash steel capacity by 60 million tonnes by 2017 and shut more outdated mills this year.

Similarly in Heilongjiang province, a statistician said first-half growth was likely to be the lowest on the mainland at under 5 per cent. It was also the weakest performer in the first quarter, when growth fell to 4.1 per cent.

In contrast, economies in the west posted double-digit growth between January and June, helped by policy support.

Meanwhile, the biggest export-oriented provinces of Guangdong and Zhejiang saw growth slow to between 7 per cent and 7.5 per cent, in line with Beijing's goal of cutting its reliance on exports in favour of domestic consumption.

In Shandong province, growth edged up to 8.8 per cent in the first half from 8.7 per cent in the first quarter.