CNR：I'm from China National Radio. I have two questions. First of all, you just mentioned that the employment rate continued to grow, yet the economic and industrial growth rates were both slowing down in the first quarter; is this logical? Secondly, according to the data you just released, the CPI has increased to 2.4 percent in March -- from 2 percent in February. But the PPI has dropped to -2.3 percent in March from -2 percent in February. Some analysts say this shows that the nation's inflationary pressure is declining while deflationary pressure is increasing; how do you see this?

Sheng Laiyun: Thanks for your questions. According to the logic of economics, it is likely that employment will be in a good shape when the economy is running well, while the employment will face large pressure placed in a downward economy. Why is this then not the case in China? It's not because China doesn't follow the logic. There are a few reasons to explain this.

First of all, although we do have a slowing growth rate, China's economy is still growing at a high speed and expanding the increase of wealth. Like in the first quarter, the growth rate dropped by 0.3 percentage points, compared with the same period of last year, but the GDP increased 780 billion yuan (US$125 billion), up by 20 billion yuan year-on-year. As a result, the economy is growing overall and this requires much more labor.

Secondly, the economic structure is changing. Like I said, the proportion of the tertiary industry is rising and the service sector is growing as well. The service sector is labor intensive, it will in turn demand more labor.

On a third note then, there are some changes in the demand and supply structure of labor. Last year, we released statistics on the working-age population between 16 and 59 of age. The number in 2013 decreased by 2.44 million compared to 2012, which released the pressure of employment. This is why we now have a good situation on China's labor market while the economy is slowing down.

About your second question then, that the CPI and PPI are headed in different directions, this also has some valid underlying reasons. In March, the growth rate of the CPI increased by 0.4 percentage points from the previous month, but this is mainly due to the carry-over effect. The carry-over effect has risen by nearly 1 percent from February, which resulted in the 0.4-percent growth. There are two reasons for the PPI drop in March. First, the conflicts of supply and demand are still acute. The traditional industry is enlarging its capacity, and since we have stopped the stimulus policy, supply remains more than demand. That's the reason behind the decline of the producer price. Another reason is the international factor. The United States is putting a stop to the Quantitative Easing policy, which in turn contributed to the rising price of staple commodities, which subsequently impacted the domestic market.

I want to remind everyone that we should pay attention to the use of the PPI data. We shouldn't make a big deal about the negative growth. The carry-over effect has impacted the PPI as well as CPI. In March, the PPI was -2.3 percent, among which -1.7 percent came from last year's carry-over, accounting for a 74-percent decrease. Only 26 percent of the PPI drop stemmed from new reasons. The negative data of the PPI shows the big pressure between supply and demand, but we have to constantly consider the structural reasons behind this. Thank you.

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