China's economy stabilizing against headwinds

BEIJING - With industrial profits sliding, factory activity retreating and the stock market on wild swings, China's economic future seems blurry.

However, positive changes in the fundamentals can not be ignored and are helping the economy embark on a path of stabilizing, analysts say.

China's economy expanded 7 percent in the second quarter of 2015, the same as in the first quarter.

Recent statistics show profits at major Chinese industrial firms dropped in June and an indicator on manufacturing activities fell in July to the lowest level since last April.

Wild ups and downs in the country's stock market add to uncertainties. The benchmark Shanghai Composite Index recorded the sharpest daily drop since Feb 27, 2007, an 8.48 percent plunge, on Monday. It snapped back with a 3.44 percent rebound on Wednesday.

Despite those unnerving figures, an official with the country's top economic planner said the fundamentals of China's economy are stabilizing and improving.

Industrial output has continued to recover, new types of businesses have flourished, and the service sector has become an increasing contributor to the national growth, said Li Yunqing, an official at economic operation department of the National Development and Reform Commission.

Surpassing market anticipation, China's industrial output climbed by 6.8 percent from a year ago for a third straight month of increases in June.

"If we look at the structure of the economy and the quality of growth, the results are more encouraging," Li said.

For example, six major energy-intensive industries, such as steel and building materials, slowed down significantly in the first half, actually mitigating some growth of emerging industries, he said.

High-tech industries' output rose 10.5 percent year on year in the first half, with industrial robots surging 130 percent and railway locomotives jumping 91 percent.

While fixed-asset investment continued to soften, its structure is shifting to consumption-linked and emerging industries.

Six major energy-intensive industries recorded a total investment growth of 7.5 percent year on year in the first half, 2.2 percentage points below the overall investment in manufacturing.