SCIO briefing on China's economy in the first three quarters
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E-mail China.org.cn, October 19, 2016
CCTV：
We see many positive changes in the economic data of the third quarter of this year. Would you please give us a comprehensive evaluation of the economic performance of the third quarter? Could you summarize the performance with a keyword?
Sheng Laiyun:
Thanks for your question. This year, regional governments and departments have fully implemented the decisions and plans of the CPC central leadership and the State of Council, especially enhancing their effort in the third quarter of this year. With regard to the main indicators, economic operation has maintained overall stability while making steady progress in the first three quarters of this year, which is specifically shown in the following aspects:
First, economic operation continues with stability and more positive changes, and the stability has been enhanced. We observe the macro-economy mainly from indicators involving growth, employment, inflation and international balance of payments. These indicators obviously show great stability in economic growth.
a) The economic growth stabilizes. GDP in the third quarter of 2016 registered a year-on-year increase of 6.7 percent, flat with that in the first half of this year. To be specific, more remarkably steady progress is seen in the industrial sector, which grew 6.0 percent year-on-year in H1 and 6.1 percent in Q3 this year. The volume of industrial consumption and output of electricity and freight traffic has seen rapid growth since the beginning of the third quarter of this year. The industrial sector has clearly tended to stabilize.
b) Employment is better than expected. A total of 106.7 million new jobs were created in urban areas in the first three quarters of this year, equivalent to the target set for the whole year of 2016. According to a survey from September 2016, the unemployment rate in the urban areas of 31 big cities was lower than 5 percent for the first time since June 2013.
c) Overall consumer prices grow mildly. Consumer prices in the first three quarters went up 2.0 percent year-on-year, down 0.1 percentage points compared to the first half of the year. The change has mainly been seen in the prices of manufactured goods. The decrease in PPI is narrowing and turned to be positive from negative in September 2016 for the first time, ending continuous decline of 54 months. It means that the supply-demand relationship in the industrial sector has been undergoing substantial changes.
d) Trade in goods has kept its surplus. Despite the deficit in the service trade, the net surplus in goods and service trade in the first three quarters accounts for less than 3 percent of GDP according to preliminary calculation.
As far as the four macro indicators are concerned, it is a good pattern with 6.7 percent growth in GDP, 2 percent increase in CPI and the unemployment rate of around 5 percent. The economy remains steady and the basis for stability has been strengthened.
Second, the supply-side structural reform has made positive progress. a) New achievements have been made in eliminating excess capacity, digesting inventory, deleveraging, reducing costs and improving disadvantages. With regard to cutting excess capacity, the raw coal yield in the first three quarters went down 10.5 percent year-on-year. For inventory digestion, by the end of August 2016, the inventory of finished goods in industrial enterprises above designated size saw a year-on-year decrease for five consecutive months. By the end of September 2016, commercial housing building area on the market dropped for seven consecutive months. In cost reducing, both business costs and the asset-liability ratio are on the decline. As for improving disadvantages, rapid growth has been seen in the investment in environmental protection, agriculture, forestry, water conservancy and infrastructure. b) The industrial structure continues upgrading. The added value of the service industry in the first three quarters accounts for 52.8 percent of GDP, up 1.6 percentage points compared to the same period last year. The industry has sped up transformation into mid- and high-ends. The added value of the high-tech industry and equipment manufacturing industry grew 4.6 and 3.1 percentage points faster than industries above designated size, respectively. Their proportion has gone up 0.6 and 1.2 percentage points, respectively. c) The demand structure keeps upgrading too. The proportion of investments in the high-tech industry and service industry increases, while that of high energy-consuming industry declines. With regard to the contribution of investment, consumption and net export, consumption contributed 71 percent of economic growth, up 13.3 percentage points from the same period of last year. Capital contribution stood at 36.8 percent with a slight decline, while net export contribution registered at negative 7.8 percent. In this pattern, consumption contribution to economic growth kept increasing, which means that the demand structure is going in a good direction.
Third, as for the transformation from old to new drivers, the new economy has maintained rapid growth and new drivers of growth has picked up speed. The new economy, represented by new industries, new technologies, new commercial activities, new patterns, new products and new services, continues to maintain a rapid growth. Daily registered new enterprises average 14,600 this year, a daily increase of roughly 2,000 enterprises from the same period of last year. Strategic emerging industries and high-tech industries remain at a growth rate of over 10 percent. In new commercial activities, online retail sales in the first three quarters rose 26.1 percent. As for new products, the number of new-energy automobiles, for example, increased 83.7 percent in the first three quarters. It shows the new economy and new drivers grow faster during the transformation and upgrading of China's economy.
Fourth, energy efficiency has made prominent progress and economic operation has improved steadily. The energy consumptions per GDP in the first three quarters went down 5.2 percent year-on-year, a continuous decline. The profits of industrial manufacturing enterprises saw a remarkable improvement. The profits of industrial enterprises above designated size rose 8.4 percent during the first eight months of this year and 19.5 percent in August. Hence, the economic operation has gotten better.
Fifth, residents' income has grown steadily and the livelihood of the people continues to improve. The actual growth of residents' income in the first three quarters went up 6.3 percent, which is lower than the 6.7 percent growth of GDP. In fact, the 6.7 percent refers to the total growth rate of GDP. If demographic factors are taken into consideration, the growth of per capita income and per capita GDP is basically synchronized. Residents' expenditure in consumption keeps growing and the upgrading of consumption structure is accelerating. Social security undertakings have been developing steadily. The fiscal expenditure in residents' social security, employment, health care and family planning, and affordable housing construction has grown 14 percent. The livelihood of the people keeps improving.
As far as the five aspects are concerned, economic growth in the first three quarters has maintained overall stability while making steady progress in economic operations, economic structure, growth of new drivers, operation quality and livelihood improvements. I'd like to summarize it with the four keywords: steady, progressing, quality-improving and better-than-expected. Thank you!
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