SCIO briefing on China's economy in the first three quarters
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E-mail China.org.cn, October 19, 2016
China Daily:
How did the real estate market in the third quarter contribute to economic growth? It has been widely anticipated that economic growth in the third quarter this year would outperform the second quarter, but the figures show they have drawn even. What're your views on this issue? Thank you.
Sheng Laiyun:
Thanks for your questions. Sales of the real estate market in the third quarter this year performed well. Growth of commercial housing sales remains high when compared to that in the first half of this year, and the sold area of the commercial housing market in the first three quarters increased by 26.9 percent year on year. Sales in the housing market in the first and second quarters of this year also performed well, as growth in the first half of this year was 27.9 percent. But aggregate sales in the third quarter this year fell to a certain extent from the second quarter. The real estate market has contributed a significant part to economic growth this year. Tomorrow, we'll issue a group of indexes considering the added values of different industries. Based on a preliminary calculation, the real estate has contributed around 8 percent to the growth of the gross domestic product (GDP) in the first three quarters this year.
The second question raised was about the growth of GDP. First and foremost, the 6.7 percent of GDP growth in the third quarter this year has been calculated precisely. Based on industrial structures, primary industries in the past three quarters this year grew by 3.5 percent year on year, which was 0.4 percentage points higher compared to that in the first half of the year. The faster growth is basically a result of the fall harvest, when considerable amounts of crops and vegetables are offered to the market. For secondary industries, the added value of the construction industry in the third quarter of this year fell by nearly 1 percentage point from that in the first half of the year. Electric power consumption and generation recovered in the third quarter this year and the performance of second industries drew even to that in the first half of this year. Tertiary industries in the third quarter this year performed well, as the growth rate was 7.6 percent, rebounding from the first half of this year. The growth resulted from rapid developments in retail sales, transportation and the real estate market. Those are the views considering the different categories of industries.
Now let's take a look at the structures of market demands. Growth of retail sales of consumer goods and exports accelerated in the third quarter of this year, while investment growth rates subdued slightly when compared to the first half of this year. Actual consumption growth also fell a bit. The general demand was stable and the 6.7 percent GDP growth is precise, fundamental and true in terms of both the production or demand sides.
Secondly, despite the even draw between the GDP growth in the third quarter and that of the first half this year, there are signs of positive changes in its structure signaled by improvements in growth qualities and efficiencies. I have already mentioned in my answer to the first question that structures have kept upgrading, energy consumption per unit GDP has been lowered and quality of economic operation has been improved.
Thirdly, I have noted the forecast of some institutions as the indexes indicating a positive way for the economy in the third quarter. Why did the GDP still grow in the similar rate? There is something of an intuition regarding the economic operation. The impression caused by present price and constant price are different. The growth of GDP is calculated on the constant price while avoiding the influence of present price and such a calculation method may result in people thinking that the actual growth rate is different from what they have expected based on the market-decided present price. The growth of ex-factory price of industrial products turned positive from negative, resulting in a higher sales revenue and corporate profit. This led people to feel the economy performed better. That is not wrong. But the calculation of GDP should keep away the impact of price factors and concentrate more on actual growth of goods and services.
Moreover, I'd like to remind you of figuring out the changes of economic performance in months of a consecutive period when studying the data. The positive changes in the third quarter mostly took place between Aug. and Sept. when some indexes much improved while in July some growth indexes fell compared to June.
That means you will feel one way when viewing monthly data and another way when viewing quarterly data. Let's take an example. The growth of fixed assets investment in Aug. and Sept. recovered, which convinced people of a general rise of the investment in the sector. Actually the growth from Jan. to Sept. this year increased by 8.2 percent, about 0.1 percentage point higher than that in Jan. to Aug. But at the same time the growth dropped 0.8 percentage points when compared with the first half of this year. Therefore, we adopted the term "moderate and stable growth" to describe the development of fixed assets investment, which is different from "stabilized and improved" in defining the sector's performance in Aug. and Sept. Therefore, the observation of the economic performance should take the changes of present prices and monthly and quarterly data into consideration.
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