SCIO press briefing on H1 economic performance

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Sheng Laiyun, spokesperson of the National Bureau of Statistics (NBS)

Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

July 15, 2016

Xi Yanchun:

Ladies and gentlemen, good morning! Welcome to the SCIO press conference. To help you understand the performance of the Chinese economy during the first half (H1) of the year, we are very pleased to have Mr. Sheng Laiyun, director-general of the Department of Comprehensive Statistics, and spokesperson of the National Bureau of Statistics (NBS), give you a briefing and take your questions. First, let's welcome Mr. Sheng to give us the briefing.

Sheng Laiyun:

Thank you, madam chairperson. Friends from the media, good morning! I am glad to meet you once again. As the tradition goes, I'd like to brief you on the main indices of the Chinese economy before taking your questions.

Stable in general with progress in H1

In H1, despite the complicated domestic and international situations and the continuous, great downward pressure, all regions and departments, under the resolute leadership of the CPC Central Committee and the State Council, seriously implemented the ideas for "innovative, coordinated, green, open and shared" development; while they moderately expanded the gross demand, they accelerated the supply-side structural reform and vigorously promoted the mass innovation and entrepreneurship. China's national economy was generally stable with advancements in stability.

Initial accounting shows that the GDP for H1 totaled 34.0637 trillion yuan (US$5.099 trillion), up by 6.7 percent on a constant price year on year.

As for the statistics for each quarter, Q1 registered a growth of 6.7 percent and Q2, 6.7 percent, both on a year-on-year basis. As for different industries, the value-added of the primary industry reached 2.2097 trillion yuan (US$330.79 billion), up by 3.1 percent year on year; the value-added of the secondary industry amounted to 13.425 trillion yuan (US$2.01 trillion), up by 6.1 percent year on year; and the value-added of the tertiary industry was 18.429 trillion yuan (US$2.76 billion), up by 7.5 percent year on year.

Compared with the precedent period, the GDP for H1 grew by 1.8 percent.

1. Agricultural production was basically stable, with a small decrease in the summer grain output.

The nationwide gross summer grain output was 139.26 million tons, which was 1.62 million tons less than that of last year, representing a 1.2-percent drop. The figure was slightly lower than the historical high of last year, but was still the second highest in history. During H1, the output of meat products (pork, beef, mutton and poultry) totaled 38.53 million tons, down by 1.3 percent year on year, in which the output of pork stood at 24.73 million tons, down by 3.9 percent. The total number of live pigs was 402.03 million, down by 3.7 percent while that of pigs slaughtered was 319.59 million, down by 4.4 percent, both year-on-year.

2. Industrial production remained stable with slight growth and improved profitability.

During H1, the value-added of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations increased by 6.0 percent on a constant price year on year; the growth rate was 0.2 percentage points higher than it was during the first quarter (Q1). As for different types of economies, the added value of the state-owned enterprises dropped by 0.2 percent, that of collectively owned enterprises grew by 2.6 percent, that of joint ventures grew by 7.2 percent and that of foreign, Hong Kong, Macao and Taiwan-invested enterprises increased by 3.2 percent.

As for the three main sectors, the added value of the mining industry increased by 0.1 percent year on year, that of manufacturing grew by 6.9 percent, and that of electricity, heating, gas, and water grew by 2.6 percent. While the industrial structure continued to be optimized, during H1, the added value of high-tech industries and equipment manufacturing grew by 10.2 percent and 8.1 percent, respectively, and their growth rates were respectively 4.2 percentage points and 2.1 percentage points faster than that of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations. Their proportions in such industrial enterprises stood at 12.1 percent and 32.6 percent respectively, 0.7 percentage points and 1.2 percentage points higher on a year-on-year basis.

In June alone, the added value of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations grew by 6.2 percent year on year and 0.47 percent when compared with the precedent period. In H1, the sales rate for such industrial enterprises reached 97.3 percent. These industrial enterprises registered a total export delivery value of 5.5117 trillion yuan (US$825.10 billion), down by 0.7 percent year on year.

From January to May, industrial enterprises with annual revenue of 20 million yuan or more from their main business operations generated total revenues of 2.3816 trillion yuan (US$356.53 billion), up by 6.4 percent year on year; the figure for the same period last year was a year-on-year 0.8 decline. For these industrial enterprises, in every 100 yuan of the revenue from main businesses, the cost was 85.73 yuan, and the profitability rate for their main businesses was 5.59 percent.

3. The growth of fixed-asset investment slowed down, and the floor space for commercial housing on sale was reduced.

In H1, fixed-asset investment (excluding rural households) was 25.836 trillion yuan (US$3.87 trillion), which represented a nominal increase of 9.0 percent or an 11.0-percent rise deducting the price factor. The growth rate retreated 1.7 percentage points compared to that of Q1. In detail, the investments from state-owned holding entities stood at 9.1089 trillion yuan (US$1.36 trillion), up by 23.5 percent; private investment was 15.8797 trillion yuan (US$2.38), up by 2.8 percent, and it accounted for 61.5 percent in total investment.

As for different industries, the primary industry invested 746 billion yuan (US$111.68 billion), up by 21.1 percent year on year; the secondary industry invested 10.1702 trillion yuan (US$1.52 trillion), up by 4.4 percent; the tertiary industry invested 14.9198 trillion yuan (US$2.23 trillion), up by 11.7 percent year on year. The infrastructure investment (excluding electricity, heating, gas, and water) was 4.9085 trillion yuan (US$734.80 billion), increasing by 20.9 percent.

As for allocable funds, in H1, 28.2443 trillion yuan (US$4.23 billion) became available for allocation. This number is up by 8.0 percent year on year. In detail, the national budget rose by 21.8 percent, national loans grew 12.4 percent, the self-raised funds increased by 1.4 percent and the use of foreign capital reduced by 7.2 percent. Also in H1, the newly commenced projects had a total planned investment of 24.0202 trillion yuan (US$3.60 trillion), which represented a rise of 25.1 percent year on year. As for the change compared with the precedent period, fixed-asset investment (excluding rural households) expanded by 0.45 percent.

During H1, real estate investment nationwide reached 4.6631 trillion yuan (US$698.07 billion), which was a 6.1-percent nominal increase or 8.0-percent increase deducting the price factor. The growth rate retreated 0.1 percentage points than that of Q1. Among the growth, the investment for residential housing grew by 5.6 percent. The floor space for new housing construction area was 775.37 million square meters, up by 14.9 percent year on year and in this number, that of residential housing grew by 14.0 percent.

Real estate sales in terms of the floor space nationwide was 643.02 million square meters, growing by 27.9 percent year on year, of which residential housing grew by 28.6 percent. Also across the nation, the revenues from property sales reached 4.8682 trillion yuan (US$728.78 billion), up by 42.1 percent, of which the sales of residential housing grew by 44.4 percent. The land purchased by real estate developers totaled 95.02 million square meters, down by 3.0 percent. In June, the total floor space of property on sale was 714.16 million square meters, a reduction of 21 million square meters from that at the end of March and 7.53 million squares from that of the end of May. In H1, the real estate developers nationwide in total had allocable funds of 6.8135 trillion yuan (US$1.02 trillion), rising by 15.6 percent year on year.

4. Market sales grew steadily and online sales grew faster.

In H1, retail sales of consumer goods totaled 15.6138 trillion yuan (US$ 2.34 trillion), which represented a nominal rise of 10.3 percent or 9.7 percent after deducting the price factor. The growth rate stayed the same as that of Q1.

Retail sales of enterprises or units above a designated size totaled 7.1075 trillion yuan (US$1063.49 billion), up by 7.5 percent. In terms of different regions, retails sales of consumer goods in urban areas totaled 13.4249 trillion yuan (US$2009 billion), up by 10.2 percent, while the sales in rural areas totaled 2.1889 trillion yuan (US$327.52 billion), up by 11.0 percent. In terms of different consumption types, income from the catering industry registered 1.6683 trillion yuan (US$249.63 billion), up by 11.2 percent year-on-year; retail sales of consumer goods totaled 13.9455 trillion yuan (US$2087 billion), up by 10.2 percent year-on-year. Retail sales of consumer goods above a designated size totaled 6.6857 trillion yuan (US$1000.34 billion), up by 7.6 percent year-on-year. In June, retail sales of consumer goods rose by 10.6 percent in nominal terms (an increase of 10.3 percent in real terms after deducting price factors), up by 0.92 percent month-on-month.

In H1, online retail sales totaled 2.2367 trillion yuan (US$334.67 billion), up by 28.2 percent from the same period last year. Online retail sales of physical commodities totaled 1.8143 trillion yuan (US$271.46 billion), up by 26.6 percent, accounting for 11.6 percent of the total retail sales.

5. The decline of imports and exports has slowed and the proportion of general trade grows.

Imports and exports in total reached 11.1335 trillion yuan, down by 3.3 percent year on year in the first half of this year. However, the decline was 3.6 percentage points less than that of the first quarter of this year. Among the total volume, exports reached 6.4027 trillion yuan, down by 2.1 percent, registering a decline 3.6 percentage points less than that of the first quarter. Imports slid 4.7 percent year on year to 4.7307 trillion yuan, a drop 3.7 percentage points less than that of the first quarter of this year. The transaction of imports and exports resulted in a trade surplus of 1.6720 trillion yuan.

In June of this year, imports and exports totaled 2.0378 trillion yuan, registering a year-on-year decline of 0.3 percent. Among that, exports grew by 1.3 percent to 1.1745 trillion yuan, while imports saw a drop of 2.3 percent to 863.3 billion yuan.

The structure of trade has improved. In the first half of this year, imports and exports of general trade took up 56.4 percent of the total volume, registering a growth of 1.2 percentage points on a yearly basis. The general trade accounted for 55.7 percent of the exports, a rise of 1.3 percentage points year on year. Exports of electromechanical products topped other sectors by contributing 57.2 percent to overall exports. Exports of privately owned enterprises grew by 3.6 percent and accounted for 46.6 percent of total exports, which enabled the sector to secure the top position in terms of exports volume. The exports to the countries exemplified by Pakistan, Russia, Bangladesh, India and Egypt along the routes of "Belt and Road" Initiative respectively grew by 22.5 percent, 16.6 percent, 9.0 percent, 7.8 percent and 4.7 percent. Imports of some bulk commodities, such as, iron ores, crude oil, coals and coppers kept growing by 9.1 percent to 494 million tons, 14.2 percent to 187 million tons, 8.2 percent to 108 million and 22 percent to 2.74 million tons, respectively, in the first half of this year.

6. Consumer prices grew mildly and the fall of Industrial Product Price slowed on a yearly basis.

In the first half of this year, consumer prices went up 2.1 percent year on year, drawing even to the growth rate of the earliest quarter of this year. Specifically, prices of either cities or rural areas rose by 2.1 percent. Grouped in commodity categories, prices for foods, tobacco and liquor grew by 5.0 percent, clothing was up 1.6 percent, accommodations were 1.4 percent higher, daily necessities and services rose by 0.5 percent, transportation and communication had a 2.1 percent decline, recreation, education, and cultural goods and services grew by 1.3 percent, health care was up 3.2 percent and other commodities and services had a growth of 1.4 percent. In the food, tobacco and liquor sector, prices of grains rose by 0.6 percent, pork soared 28.2 percent and fresh vegetables were up 18.2 percent.

In June of this year, consumer prices grew by 1.9 percent year on year while falling 0.1 percent month on month. In the first half of this year, PPI dropped by 3.9 percent year on year; however, the decline was 0.9 percentage points lower than that of the first quarter of this year. In June, PPI were down by 2.6 percent year on year, or 0.2 percent month on month. At the same time, purchasing prices for industrial producers plummeted by 4.8 percent year on year. And in June, it slid by 3.4 percent year on year and up 0.2 percent month on month.

7. Residents' income maintains stable growth and migrant workers' incomes keep growing.

In the first of half this year, the average disposable income of residents reached 11,886 yuan, registering a nominal growth of 8.7 percent and actual growth of 6.5 percent regardless of price factors on a yearly basis. In view of permanent residences, the average disposable income of urban residents reached 16,957 yuan, up 8.0 percent nominally and 5.8 percent regardless of the price factors year on year. At the same time, the average disposable incomes of rural residents rose to 6,050 yuan, registering a nominal growth of 8.9 percent and actual growth of 6.7 percent regardless of price factors. The per capita income of urban households was 2.8 times that of rural households, and the figure is 0.03 less than that of the same period last year. The median disposable income reached 10,505 yuan, registering a nominal growth of 8.3 percent. By the end of the second quarter this year, the farmer-turned-migrant-labor force climbed by 0.4 percent to 175.09 million, an increase of 730,000 people year on year. The average monthly per capita income of migrant labors reached 3,202 yuan, up 6.7 percent year on year.

8. The economic structures were improved and upgraded.

The industrial structure continued to be improved and upgraded. In the first half of the year, the value added in tertiary industries accounted for 54.1 percent of the GDP, 1.8 percentage points higher than the same period during last year, and 14.7 percentage points higher than the secondary industries this year. The composition of demand was further improved. The final consumption expenditure contributed 73.4 percent to the GDP in the first half of this year, about 13.2 percentage points higher than the same period during last year. The central and western regions maintained stronger development momentum. The value added of the industries above the designated size in the central and western regions grew by 7.3 percent and 7.2 percent respectively, higher than the eastern region by 0.9 and 0.8 percentage points. Investments on fixed assets without those from rural households grew by 12.8 percent and 13.5 percent in the central region and western region, 1.8 percentage points and 2.5 percentage points higher than the growth of the eastern region. Further progress was made in energy saving. The energy consumption per unit of GDP decreased 5.2 percent year on year.

Preliminary achievements have been made in cutting industrial overcapacity, destocking, de-leveraging, lowering costs and improving weak links. In the first half of this year, the output of crude coal and steel decreased 9.7 percent and 1.1 percent year on year. Positive results were seen in the destocking of industrial enterprises and the commercial housing market. At the end of May, the stock of finished products of industrial enterprises above a designated size dropped 1.1 percent year on year. From March to June, the area of unsold commercial buildings decreased for four consecutive months. Drops were seen in both the debt to assets ratio and the cost of industrial enterprises above a designated size. At the end of May, the debt to assets ratio for industrial enterprises above a designated size lowered to 56.8 percent, down by 0.5 percent year on year. In the first five months, the cost per 100 yuan of main business revenues for industrial enterprises above a designated size dropped 0.22 yuan year on year. Investment in weaker sectors enjoyed fast growth. In the first half of this year, investment in the water conservation, environmental protection and public facility management sectors, as well as investment in the information transfer, software and information service sectors grew 26.7 percent and 22.5 percent respectively, 17.7 percentage points and 13.5 percentage points higher than the total.

On the whole, in the first half of this year, with the deepening of reform and innovation, as the macroeconomic policies continued to take effect, national economic growth remained stable and achieved positive progress, paving the way for us to fulfill our annual economic goals. However, we should also be aware of the complicated domestic and international environment, as well as downward economic pressure. For the next step, we must firmly follow the decisions of the Central Committee of the Communist Party of China (CPC) and the State Council. We should remain confident and vigorous. We will focus on development as the top priority and promote steady progress. While appropriately expanding the aggregate demand, we will steadfastly advance supply-side structural reforms, build new economic structures and foster new drivers of economic growth, thus promoting a sustainable and healthy development of the national economy.

That's all regarding the national economic performance of the first half of the year. Now, I'm ready to answer questions.

Xi Yanchun:

Thank you for the introduction, Mr. Sheng Laiyun. Now let's open the floor for questions and I humbly remind you to identify your media outlets before asking questions.


We've noticed that the GDP growth rate in Q2 was 6.7 percent, which was relatively the same as in Q1. Does this mean that China's economy is stabilizing or has hit the bottom of the so-called "L-Shaped" growth model? And also, what do you think of the new changes in economic operation during the past half a year? Thank you.

Sheng Laiyun:

Thanks for your question. With regard to the economic operation in H1 this year, we see that it has maintained overall stability while making steady progress. Almost all the main indicators are progressing well and have met our expectations as well as the development pattern under the "New Normal" of China's economy. To be specific, I want to summarize the main features of economic operations in H1 with the following five keywords.


First, China's economic growth is quite stable with its rate resting at 6.7 percent in both Q1 and Q2 and showing signs of a time-phased stabilizing pattern. While the growth rate in H1 this year registered at 6.7 percent, down by 0.3 percentage points over the same period last year, the GDP volume generated by this 6.7 percent growth rate, if calculated according to the same prices in 2010, actually increased by 23 billion yuan compared with the same period last year. Therefore, China's economy is reaping steady growth. Second, employment is also stabilizing. According to data from the Ministry of Human Resources and Social Security, urban employment increased 7.17 million in H1, completing 71.7 percent of the target set for the whole year. From our statistics, unemployment rates in major cities is around 5.2 percent while the average rate in 31 big cities rested at 5 percent, which is a sign of stabilization. Third, commodity prices are stabilizing. Consumer Price Index (CPI) in H1 grew by 2.1 percent year-on-year, which is relatively the same with that of Q1. The CPI grew by 1.9 percent in June year-on-year. While deducting fluctuations of energy and food prices, core CPI in recent quarters has stayed between 1.5 percent and 1.6 percent. Fourth, income and consumption growth is also stabilizing. Residents' income grew by 6.5 percent in real terms during the first half of the year, the same with that of the Q1. Total retail sales of consumer goods grew by 10.3 percent, also the same with that of Q1. Therefore, based on these indicators, we are can see that China's economy is stabilizing in an obvious and continuous way and that all the indicators are within a reasonable range.


Supply-side structural reform as well as industrial upgrade is progressing smoothly and vigorously. First, with regard to industrial structure, the tertiary industry is maintaining relatively rapid growth and has accounted for up to 54.1 percent of GDP, up 1.8 percentage points over the previous year. We are particularly concerned with the brick-and-mortar businesses, notably high-tech industries which grew by 10.2 percent in H1 and accounted for 12.1 percent of the whole, increasing by 0.7 percentage points year-on-year. Second, demand structure is progressing. Final consumption expenditure contributed to 73.4 percent of economic growth, up 13.2 percentage points year-on-year. While capital formation contributed 37 percent to GDP growth, exports in services and goods took up -10.4 percent of the whole. Domestic demand still plays a decisive role in supporting and stabilizing growth, and consumption contributes a larger share to economic development. Third, in terms of regional structure, the middle and western regions still enjoy a late-bloomers advantage with the growth rate of its industrial added value higher than that of the eastern region as well as the national average. Moreover, the "Belt and Road" Initiative, "Beijing-Tianjin-Hebei Integration", and "Yangtze River Economic Belt" are also progressing steadily. Fourth, supply-side structural reform has fully launched with the goal of "reducing overcapacity, destocking, deleveraging, reducing costs and shoring up weak growth areas" having early results. In terms of reducing overcapacity, coal and crude steel output was cut by 9.7 percent and 1.1 percent respectively; in terms of destocking, the total area of residential housing for sale decreased by 21 million square meters by the end of June as compared with that of March; in terms of deleveraging, the asset-liability ratio for industrial enterprises above designated size dropped 0.5 percentage points by the end of May; in terms of reducing cost, the main business cost per 100 yuan for industrial enterprises above designated size is also sliding. Investment in infrastructure is also gathering speed, especially in fields like agriculture, forestry, water resources, poverty alleviation and high technology. Based on the above statistics, China's economic restructuring is progressing steadily and aggressively.


New businesses and new driving forces of economic growth are gaining momentum. This year has seen another expansion of businesses following the rapid growth of last year. According to the State Administration for Industry & Commerce, the number of newly registered companies every day averaged at 14,000 in H1, a further expansion from 12,000 over the same period last year. With regard to new industries, the growth of hi-tech industries continues to accelerate. New industries with strategic importance grew by 11.8 percent in Q2 this year, up 1.8 percentage points over the previous quarter. New business modes and business patterns are also growing at a relatively high speed. Online retail revenue grew by 28.2 percent in H1 with new business patterns like online cab-hailing, online education and online medical services emerging and new products booming.


The quality of economic performance has been improved. In the first half of the year, the energy consumption per unit of GDP decreased by 5.2 percent year-on-year, which means that Chinese economic growth has been guided in a positive direction. The year-on-year declining rate of the PPI has shrunk for six consecutive months, which is beneficial not only to the market environment, but also to enterprise profits. From January to May, industrial enterprises above designated size witnessed a profit growth of 6.4 percent, while there was negative growth last year. Other areas in society also underwent a rapid development in the first half of the year. In a word, the Chinese economy is stable, progressing, positive and innovative, but also difficult.


Firstly, the international environment is still complex. Global economic recovery is far from expectations, trade continues depression and more uncertain factors are emerging. The recent Brexit referendum added more uncertainty to the world economy, which has made the outside environment more difficult. Secondly, the Chinese economy has stepped into a critical stage for structural adjustment, transformation and upgrading. The pains of structural adjustment remain while the real economy is still in a predicament. In addition, macro-control has more dilemmas and problems to face. Therefore, the situation is still complicated with lots of difficulties ahead, and the downward pressure of economic development is mounting. Facing such a complex situation, we can say that the Chinese economy did a very good job in the first half of the year.

In the future, guided by the CPC Central Committee and the State Council, we will boost our spirit, strengthen our confidence, promote structural reform on the supply side, develop mass entrepreneurship, cultivate new economic structure, gain new growth momentum, continue being stable and move in a positive direction. Thank you.

Phoenix TV:

The National Bureau of Statistics (NBS) recently released the reformation of the GDP calculation method, which affected the data during the first half of the year. Some experts think that the reformed method has increased such data. What are your thoughts on this?

Sheng Laiyun:

Thank you for your question. Recently, the media has paid a lot of attention to the reformed GDP calculation method, which gained a range of support at home and abroad. I have recently received several letters from international organizations, such as United Nations Statistical Commission and International Monetary Fund. The officials of those organizations praised and expressed their support to our reformed calculation method. Including research and development (R&D) into GDP is a significant reform, as well as a systematic plan. Since the UN published the System of National Accounts 2008 (SNA2008), NBS has made every effort to research a new calculation method and prepared to connect it with international standards. In recent years, China has attached great attention to scientific and technological innovation and vows to promote mass entrepreneurship. To reflect innovation's contribution to economic growth, NBS speeded up its reform on the GDP calculation method and released the reformed method in the first half of the year. On July 5, we released the data using the new methodology and corrected the GDP data for between 1952 and 2015. According to the data, the contribution made by innovation and R&D to economic growth increased continuously while hardly affecting the growth rate. During the past decade, the impact made by R&D investment to GDP growth rate was only some 0.06 percentage point.

In the first half year, the influence made by R&D investment calculation reform to GDP growth rate was only 0.02 percentage point. The 6.7 percent growth rate in the Q1 and Q2 won't be changed if the 0.02 percent point is deducted. In the long-term, the calculation reform is in favor not only for competing with other countries but also for stimulating domestic innovation and investment on R&D and innovation. Thank you.


Private investment growth slowed to 2.8 percent in the first half of 2016. The government has consistently stressed that steps shall be taken to boost private investment, but the effect seems unimpressive. Could you give an explanation for this? Thank you.

Sheng Laiyun:

Thanks for your question. In the first half of the year, private investment continued to slow in growth, registering a rise of 2.8 percent from January to June, which is 1.1 percentage points lower than growth from January to May. Speaking from a broader background, the slowdown is linked to its adjustment to the whole economic structure. Around 50 percent of private investments went to the manufacturing industry. As the Chinese economy entered a new stage of transformation and development, the traditional industry is in need of market clearance due to severe overcapacity, which, together with a tighter market environment as well as the falling prices of industrial products, lowers enterprises' desire for investment. This is a primary reason for the slowdown of private investment growth.

Secondly, a recent nationwide survey conducted by nine inspection teams from the State Council found that private investment in some places is facing high market access and inadequate reform as well as the Glass Door/Swing Door phenomenon, that is, policies that exist but have gone unfulfilled. These limits are unfavorable for the growth of the private investment despite the fact that they are willing to participate.

Thirdly, it is related to the finance cost of private investment. Many of the private investment entities are small businesses who have difficulties in getting loans or get more expensive loans.

The above reasons combined affect the growth of private investment.

I'd like to stress the following points: First, as the adjustment is related to the larger background of industrial restructuring, an appropriate slowdown reflects this restructuring and favors the adjustment of traditional industries as well. Second, I'd like to emphasize that the structure of the fixed assets investment continues optimizing despite a slowdown of growth in the fixed assets investment, especially in the private investment. Speaking from the industrial structure, although the growth in the secondary industry investment slowed, the tertiary industry investment maintained double-digit growth rates. Tertiary industry investment went up 11.7 percent in the first half of the year, whose proportion continued to rise. The hi-tech service industry grew faster and maintained high growth, registering a rise of 13.1 percent in the first half of the year, among which the information transmission software and information technology service industry investment went up 22.5 percent. Moreover, there have been some investments in strengthening national vulnerable industries, for example, investment in the water environment and the public facility management grew 26.7 percent. Though the investment growth slowed, the structure continued to optimize.

Last but not least, some new indicators are performing well. Of the fixed assets investment, the total planned investment in new construction projects increased 25.1 percent in the first half of the year, maintaining a high growth. Meanwhile, the recent market environment has improved, seen especially in the PPI's continued narrowing, which is favorable to business profits and helps stimulate or attract private investments as well. When the market environment turns good, business profits will improve and the enterprises will become more motivated to increase investments. The State Council put forward specific improvement measures and policies for the problems and affecting factors in private investment in its recently issued document "Notice on Further Boosting Private Investments." As long as the policies are implemented, private investments will improve, since the leading indicators perform well in a changing market environment. Thank you.

China National Radio:

The tertiary industry has seen rapid development in the past two years, contributing a lot to the Chinese economy's steady growth. The growth of sectors classified as "others" in the accounting of the tertiary industry was even faster. Some people speculate that the performance of the sectors classified as "others" was in fact not as good. What is your view of the issue? You also mentioned that the growth of private investment is declining, triggering adjustments of a number of measures at the state level. Is it possible for the growth of private investment to rebound? Thank you.

Sheng Laiyun:

I have answered the question about private investment just now. So, I will only talk about the development of the tertiary industry. It is true that the tertiary industry is enjoying rapid growth in recent years, contributing more and more to the country's economic growth. Its share in the GDP was 50.5 percent last year. In the first half of 2016, the tertiary industry maintained its rapid growth, up 7.5 percent year-on-year. Its contribution rate to the economic growth was 59.7 percent, accounting for 54.1 percent of the GDP, up 1.8 percentage points year-on-year. It is obvious that the tertiary industry remains a major momentum builder for the steady growth of China's economy.

I would like to list a number of reasons for the rapid growth of the tertiary industry. Firstly, the accelerating development of the tertiary industry accords with the rules of industrial growth. Experiences of other countries show that the tertiary industry sees a rapid growth during the middle-late stage of industrialization. It is because as industries become more and more specialized, more producer services are needed. The stage is also a crucial period for the upgrading of residents' consumption structure, which means more consumer services are demanded. Both factors pushed the rapid growth of the tertiary industry. We all know that the tertiary industry accounts for 70-80 percent of the GDP in developed countries. The good performance of China's tertiary industry during this transition period is just following the rules.

Secondly, the Chinese government and the Party have attached great importance to the development of the tertiary industry in recent years. As our country is adjusting its secondary industry, the tertiary industry turned out to be a prominent driver for the steady growth of the economy. Hence, the central government has strengthened guidance over its development and took a series of measures which have been proved effective and boosted its growth.

Thirdly, the development of the tertiary industry accords with relevant indicators. During the first half of 2016, the tertiary industry's electricity consumption grew by 9.2 percent year-on-year, 1.1 percentage point up year-on-year and 6.5 percentage points higher than the average electricity consumption of the whole society. In the meanwhile, investment in the tertiary industry in the first half of 2016 increased by 11.7 percent, accounting for 57.7 percent of the overall investment, 1.4 percentage points up year-on-year. There is also something new about foreign investment, that is, more foreign capital was channeled to the tertiary industry from the secondary industry. During the first half of 2016, foreign direct investment in the tertiary industry increased by 8 percent, 3 percentage points higher than the growth of the whole foreign direct investment. What's more, about 70 percent of the foreign investment was directed to the tertiary industry. Tax revenue indicators also proved something. The tax revenue from the tertiary industry in the first half of 2016 grew by 10.9 percent, 4 percentage points higher than the growth of the national revenue. This accounted for 58.2 percent of the total revenue, up 1.7 percentage points year-on-year. According to a survey by the National Bureau of Statistics, enterprises above designated size saw a decrease of employees due to the efforts of de-capacity, while the tertiary industry above designated size saw an increase in employees. All these indicators match with the added value of tertiary industry.

Fourthly, the NBS attaches high attention to statistics. In recent years, we strengthened reform and innovation, and established a network of direct reporting for enterprises above designated size in the tertiary industry. Some large internet-related enterprises can directly send data; we also set up a sampling survey system for small-sized service businesses. In addition, we have cooperated with other ministries to collect administrative records. These data, when combined together, serve as a solid foundation for scientific accounting.

The Chinese modern service industries witnessed rapid growth in recent years, faster than normal service industries. Modern service industries consist of nine fields, including information transmission, software, commerce and lease, film and culture, and health and aged services. They are all in line with the direction of industrial upgrading and the upgrading of residents' consumption structure, and contain strong support. I noticed that there were a number of questions regarding this section, but if the doubters truly understand the statistical systems and accounting foundations, their doubts will be dispelled. Of course, their questions created new requirements for us. We will increase the intensity of data openness and transparency. Thank you for your question.

China News Service:

Recently, officials from your bureau mentioned that the bureau was calculating statistics of the new economy. My question is, when will the results of the survey be published and how will they affect the GDP figures? The other question is regarding the flood in 28 provinces in China. How will that affect GDP? Thank you.

Sheng Laiyun:

Thank you for your attention to the GDP calculation method of the Bureau of Statistics. I will answer the question about the flood first. There has been frequent and extensive flooding in the region. We have been having abnormal weather this year. We see more extreme weather than before. We have not received the specific monitoring data regarding the degree of this flooding's impact, but we have called for statistics agencies to increase monitoring efforts. We have not yet put together these statistics. However, based on our investigation, the flooding has produced some effect on production, people's livelihood and environmental protection. In the short-term, some areas hit hard were negatively affected. In the medium and long-term, these areas might easily recover from the negative effects. For example, people have worried whether vegetable prices will rise. In the short-term, the vegetable supply in these areas will be affected and their prices may rise. However, the weather is getting warmer and vegetable grows quickly. After the flood waters subside, the affected area can quite quickly restore production and resolve the issue of vegetable supply. Regarding other issues, for example, economic growth, there is some pressure. However, large-scale reconstruction in the wake of the floods constitutes another factor to speed up economic growth.

Regarding statistics about the new economy, I have some opinions. First, it is our bureau's duty to monitor the new economy and report on it. In recent years, the new economy has grown quickly, both at home and abroad. Many governments have paid attention to the cultivation of the new economy and its development. Our country puts a lot of importance on reform and innovation and on enhancing innovation. Therefore, the new economy, characterized by new industries, new business forms and new commercial models, develops very fast. Its growth has somewhat offset the downward pressure on the industry and other sectors. And such a growth is beneficial for China's economic transformation and maintenance of economic growth. So, we need a clear picture of the new economy. We need to know exactly how big it is and how much it may contribute to economic growth in order to reflect more objectively on the shift from old growth drivers to new ones.

Second, our bureau attaches more importance to reform and innovation. We have set up relevant institutions and statistical methods, such as the system in the hi-tech industry, in the e-business sector and the online shopping sector. We will try our best to reflect the results of the new economy in the GDP. Based on previous reforms, this year we will make greater efforts to reform and innovate, and after summarizing the experience we formed what we called the "Three New" survey system on new industries, new business forms and new commercial models. The system covers almost all sectors of the new economy, such as the hi-tech industry, the strategic new industry, the hi-tech service industry, internet finance, science and technology incubators, mass innovation space and crowd-funding, city complex and local development parks. We will collect relevant data. In April we assigned the survey to the local government, and expected primary data to be reported at the end of July.

Third, the calculation of new industries, new business forms and new commercial models is not a totally new GDP calculation method. We had no intention of making the GDP figure bigger than what it really was. The new method is related to the current one, but there are differences. The three new sectors are a part of our economic activities, so it's right to include them into the GDP. Normally, the calculation of GDP is based on transactions with exchange of value, while the calculation of these three sectors concerns both transactions with or without value. There is no doubt that the transactions with exchange of value should be included into the GDP, and transactions without exchange of value should not be included. Take online shopping for example. Some websites offer free services, and this is a kind of new economic activity. According to previous calculation methods, if there is no exchange of value, it can't be calculated into GDP. But there is a problem. Most transactions with exchange of values in the three new sectors have been calculated into GDP, but due to the categorization method and the mixed business structures, we can't tell which sector they belong to. Currently, economic figures are contributed by individual legal entities and calculated into the sector of their primary businesses. For example, a large steel enterprise may have R&D business, logistics business and other new economic activities in addition to steel production. Its R&D centers may also offer services to others. However, when calculating GDP, all output of its economic activities has to be included in the steel sector. What we are doing now is making a clearer definition, calculating what ought to be calculated and better reflecting new economic activities in the GDP. Our goal is that when a conglomerate is concerned, we can tell which revenue comes from its main business and which comes from new economic activities. We are simply including everything about new economic activities into GDP. We are trying to make things clearer.

Finally, any statistical research about new industries, new business forms and new commercial models is a hard undertaking as there is no universally accepted standard for these terms, which cover a wide array of dynamic areas. The National Bureau of Statistics is, to some extent, just exploring ways of conducting this kind of statistical survey in these three sectors and we are bound to beef up our efforts and improve our methods in the future. We are, as always, dedicated to reform and innovation in order to better reflect performances of new industries, new business forms and new commercial models as well as the development of new drivers of economic growth in an accurate and comprehensive manner. Based on our existing methods of surveys and investigations, we hope to learn from our past experience and overseas research results in order to improve our statistical work on this front. Opinions and suggestions are highly welcome. Thank you.

Market News International:

You mentioned earlier that China will implement the various policies put forward by the Central Committee of the CPC and the State Council, including expanding overall demand. What measures do you have in expanding overall demand and when will these be introduced?

Sheng Laiyun:

Thank you for your questions. Expanding overall demand and promoting the supply-side reform are the fundamental economic policies adopted by the Central Committee of the CPC and the State Council, which have been clearly identified in the Central Economic Working Conference and annual government work report. The key to expanding overall demand is maintaining the consistency and stability of the policies and the continuation of a proactive fiscal policy and prudent monetary policy, which have also been made clear. As to specific measures and the timetable, I think you'd better ask the relevant departments.

Financial Times:

My question is about loans. We know that central government-owned enterprises have quite a lot of loans, especially in the coal industry, while private enterprises have to cope with high interest rates in non-banking financial institutions. Will loans impact the GDP growth in the second half of this year? My second question relates to the fact that I heard the financial industry constitutes 20 percent of the (growth of) tertiary industries; is that true? If so, will the growth rate of the tertiary industry be influenced if loan rates decline? Thank you.

Sheng Laiyun:

Thank you for your questions. I want to first of all answer your second question about the impact of the financial sector on the GDP, which has drawn attention. Based on the data of the first half of this year, the financial industry has had less contribution to the GDP growth (than previously). The growth rate of the financial industry in the first six months is 6.7 percent at constant prices, declining slightly from last year. We all know that the stock market was very active last year, and thegrowth rate of M2 this year contracted nearly 2 percent more than last year; therefore, the growth rate of the financial industry declined, and its contribution to GDP growth declined as well. Its contribution to GDP growth was not 20 percent as you said, but around 9 percent during the first six months.

As to loans for central government-owned and private enterprises, there are indeed the phenomena you mentioned. Central government-owned enterprises can more easily get loans as they have more solid guarantees. Looking at the structure of loans, we find that loan and investment growth rates of central government-owned enterprises are better than that of private enterprises. Many of the private enterprises are small businesses with inadequate guarantees. Moreover, around 50 percent of investment in private enterprises is from the manufacturing sector, whose market environment -- (sluggish) due to ongoing adjustment -- is influencing its readiness to enlarge investment. Therefore, there are fewer loans in private enterprises and they have to handle the higher expenses and difficulty of obtaining loans. I want to tell you that the related departments have been fully aware of this structural problem and are speeding up the related reforms, for instance, while we maintain a prudent monetary policy, we are also stepping up structural adjustment and targeted and discretionary macro regulation. These measures will better lead loans or credit to go into the real economy. I believe these problems (you mentioned) will be properly resolved, as long as we pursue the guidance of these policies, structural reforms, especially the supply-side reforms, and specific reform in state-owned enterprises. As to the specifics, I think you may get more information from the financial department than from me. Thank you.

Xi Yanchun:

As time is limited, a number of journalists have not been able to ask questions today. You can reach out to the news office of the National Bureau of Statistics. Thank you, Mr. Sheng, and thank all of our friends from the press. This is the end of today's press conference.

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