SCIO press briefing on H1 economic performance
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E-mail China.org.cn, July 15, 2016
CCTV:
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.
"Stabilizing"
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.
"Progressing"
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"
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.
"Positive"
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.
"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.
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