CCTV:

We see a significant change of figures in the slowing down of GDP growth in the published data. What are the major reasons for the slowdown, Mr. Sheng? You mentioned that the Chinese national economy was in good shape in the first quarter during the introduction. Can you give us a further interpretation? Employment figures show that the number of outgoing migrant workers is declining, which is rather unusual compared to the past. Does this mean there are some new changes behind the data?

Sheng Laiyun:

Thanks for your question. Let me answer your last question first. The number of outgoing migrant laborers in the first quarter decreased by six million, down by 3.6 percent from the same period last year. The data was acquired at the end of February, when the survey was conducted. As we all know, the Spring Festival falls on February 18 this year. Many migrant workers chose to go home for the Chinese New Year in February and did not return to work until the fifteenth day of the first lunar month, according to rural customs. In this way, their vacation would last until March 5. A large number of migrant workers was still at home when we took the survey. This does not mean they returned to their hometowns unemployed, but rather mainly for reunion. That's what I want to explain first.

The second question is about the reasons for the slowdown in economic growth in the first quarter and my views on the reasons for this.

The slowdown is expected. As mentioned at the Central Economic Working Conference as well as in the government work report, economic operations this year will face more difficulties than they faced last year, and there is a downward pressure on China's economy. This is true judging from the current situation. The pressure mainly comes from the following two aspects.

First, internationally speaking, the world economy has been undergoing deep post-crisis restructuring, and the economic recovery has been slow. As we know, there is great diversity in the world's current economic structure, not only between developed and developing countries, but also among developed countries, including the U.S., Europe and Japan. They have different exchange rate policies, leading to frequent fluctuations in the exchange rate. World commodity prices fluctuate sharply, and geopolitical conflicts have been increasing. All those uncertainties make it more difficult for the world economy to recover, increasing the instability of the economy. World trade is plagued by a sluggish recovery. The Baltic Dry Index stood at only 600 points at the end of March, down 21.6 percent from the beginning of this year. This indicates that external demands are obviously insufficient for world trade on the whole, which affects our exports to some extent.

Second, pressure also comes from domestic sources. China is at a critical stage with three overarching major trends. The pressure to shift economic growth is interwoven with the pain of restructuring. The fostering of new engines of economic growth will be sped up, but the impact of these new engines is still relatively small. Although their growth is fast, it can hardly make up for the effects of fading traditional engines of growth within a short period. As a result, the economy is at the critical stage of transfer from old to new engines of growth, so there is downward pressure.

The slowdown in economic growth in the first quarter should have been expected. Such a slowdown is normal because after the Chinese economy enters into a new normal, the growth rate will shift gear and will fall a bit, which will benefit restructuring and transformation.

The third question is about my views on the economy's operation in the first quarter and why we say the Chinese economy had a good start.

We should take a comprehensive, dialectical and developing view on the economic situation in the first quarter. I would like to put emphasis on the following three points:

First, the economy in the first quarter operated within a stable range on the whole, though its growth slowed down slightly. The Gross Domestic Product has grown by seven percent, which registered a slight drop year-on-year. The seven-percent growth is still high in the world, and seven-percent growth is still relatively large given the substantial size of the base GDP. Therefore, the economy did not slide out of the reasonable range as far as the growth index is concerned. Employment remained stable on the whole. Statistics from the Ministry of Human Resources and Social Security show that urban employment increased by 3.2 million in the first quarter of this year. We have an internal yet unpublished survey indicating that the unemployment rate remains stable, standing at around 5.1 percent. In addition, the consumer price index (CPI) remained stable at a low level on the whole. The CPI in March stood at 1.4 percent, basically the same as it was in February. The income increase also stayed stable. Per capita disposable income increased by 8.1 percent, broadly in line with the GDP growth. Those indexes indicate that major indexes remain within the reasonable range although the economic growth in the first quarter of this year slowed down slightly.

Second, although the growth slowed down, restructuring is advancing steadily; transformation and upgrading are accelerating, which can be reflected by major indexes like industrial structure, demand structure, the pattern of income distribution and a rise in energy saving and drop in energy consumption. A significant change in the industrial structure is shown by the service sector's more rapid growth, and the trend is more obvious in the transformation of the industry-oriented economic structure to a service-oriented one. Tertiary industry accounted for 46.9 percent of GDP in 2013, increased to 48.2 percent in 2014, and expanded to 51.6 percent in the first quarter of this year, during which the Spring Festival falls. The long vacation of the Spring Festival benefits the growth of the service sector, increasing the sector's proportion in GDP. There is obviously a trend in which the service sector grows faster than the industrial sector and the service sector's share in GDP increases, bringing a deep change to China's industrial structure.

With regard to demand, investment growth slowed effectively, but consumption grew steadily. Total retail sales of consumer goods in the first quarter of this year increased by 10.8 percent, the same as they did during the same period last year. Fixed asset investment and exports growth fell, but consumption growth remained steady. The structure of income distribution has been improving. Rural residents' income is continuouslly growing faster than that of urban residents that the difference between them is narrowing. Urban residents' income registered at 2.61 times that of rural residents' income, down 0.05 times from the same period last year. The quality of economic growth and its benefits is also improving. Energy consumption per unit of GDP decreased by 5.6 percent year-on-year and was down 4.8 percent from last year as a whole. It dropped again on top of a previous drop last year. As far as those indexes are concerned, we can see that the Chinese economic structure continues to improve and transform as upgrading accelerates.

Third, although economic growth slowed down slightly, the development of new industries, forms, subjects, products and engines of growth is speeding up. The Chinese economy's step into the middle and high end of growth is very significant. Since the beginning of this year, the Communist Party of China central authorities and the State Council have accelerated reforms, especially in the continued streamlining of administration and the delegation of power to lower levels. They continue to support the growth of small and medium-sized enterprises to stimulate market dynamics and promote entrepreneurship and innovation among the public. It is accelerating the integration of the informatization represented by new-generation information technologies such as the Internet, big data and cloud computing with industrialization, agricultural modernization and urbanization to create a number of new business forms and models. The size and number of new economic sectors are increasing. Here are some figures. First, new companies keep popping up. Statistics by authorities show that the number of newly registered enterprises in the first quarter of this year went up by 38.4 percent. The online retail sales numbers we published just now increased 41 percent on top of big growth in previous years. The high-tech industry's value added expanded by 11.4 percent, five percent higher than average industrial growth. That of alternative fuel vehicles and robotics both increased by 50 percent, and that of express delivery grew by 46.8 percent. These figures show that the Chinese economy is undergoing diverse adjustments, and the creation of new sectors, forms and subjects is accelerating. As a result, the new engines of the Chinese economy are growing faster.

These three points can be regarded as the three key dimensions through which to view the Chinese economy. In a word, although the economic growth in the first quarter of this year slowed slightly, the Chinese economy is steady, innovative and growing. Therefore, the Chinese economy still remains in a good shape and keeps growing. We are steering the Chinese economy in the right direction with an established target, and we are optimistic about the prospects of the Chinese economy on the whole.

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