Phoenix Satellite Television:

The data of the second quarter, including those in June, demonstrate a very good performance. However, we have also noted that, based on the analysis of different economists, there are different voices being heard. Some believe the economy is advancing in a new upward spiral having hit bottom; meanwhile, there is another view that pressures are lurking in the second half of this year. So, could you please tell us your view, especially, the impact of the retarded control over the real estate investment on the economy in the latter part of this year.

Xing Zhihong:

Your question generally seems to be about the economic tendency in the next stage. Amid deepened supply-side reform and implementation of the innovation-driven development strategy, so to speak, there will be more positive factors for the economy in the second half this year and the good momentum will be consolidated and expanded.

In my view, there are several points to be addressed here. First, the development of the real economy has sustained good momentum, consolidating the foundations of economic development.

The negative growth of the producer-price index (PPI), having lasting for 54 consecutive months, ended last September. Entrepreneurs saw their businesses and development prospects obviously improved, and industrial production has remained relatively stable since the deflationary impact ran out of steam. Industrial Enterprises Above Designated Size have generally sustained a growth of more than six percent since March last year, while, industry added value this year has achieved higher growth rate. Stabilized industrial productivity, improved efficiency and the promising forecasts will lure increasing investment to the sector. In the first half of this year, investment in the manufacturing industry grew by 5.5 percent, up 2.2 percentage point year-on-year. Investment for the purpose of technical upgrading increased by 11.8 percent, accounting for 45.6 percent of the total industrial investment, which would lay a solid bedrock for sustainable growth of the industry. The development of the tertiary industry also maintained a good momentum as the Service Industry Index has been able to retain a growth of eight percent since the beginning of this year. The interaction between the secondary and tertiary sectors has fostered growth of the producer service sector and the growth of IT-, commerce- and logistics-oriented service sectors have kept accelerating.

Second, the　stabile growth of demand has expanded and the driving force of economic growth has been continuously enhanced. Domestic demand, a fundamental strategic target towards which we have made ceaseless efforts, has essentially fostered the internal stimulus of economic growth, a balanced structure between supply and domestic demand, mutual stimulation between updated consumption and efficient investment, andcoordinated development between urban and rural areas--all of which highlighted the role of domestic demand in economic growth. Since the beginning of this year, consumption has made stable progress, as the Final Consumption of Expenditure contributed 63.4 percent to overalleconomicgrowth, followed byproactive investments that hold key to the increase of GDP. At the same time, overseas demand, which rose by 15 percent in the first half this year, has interacted well with the domestic demand for the improvement of the economic driving force.

Third, small and micro businesses have been more dynamic in theireconomic growth. The prosperity index among 40,000 such enterprises in a survey conducted by the National Bureau of Statistics reached 96.5 percent in the second quarter, 3.4 percentage points higher than the first quarter and the highest in the past two years. The dynamic growth of small/micro businesses is no coincidence, and the large scale of such businesses formsan extensive force for economic development and construction. According to the survey, 75.4 percent of small/micro enterprises have facilities being used at or above the normal criterion, while, 72.7 percent of respondents disclosed that the amount of their orders has also stayed at or above the normal level, signaling consecutive growth for six straight quarters. The Purchase Management Index (PMI) indicated that small and micro businesses had maintained their momentum of expansion in two consecutive months up to June. The vitality of those businesseshas reflected the inclusiveness and extensiveness of the country's economic growth.

Fourth, the market forecast is turning positive and the confidence level in the national economy keeps rising. The PMI of the manufacturing sector reached 51.7 percent in June, up 0.5 percentage points up from a month before and maintaining an interval of expansion for 11 consecutive months. The PMI of the non-manufacturing sector in June reached 54.9 percent, rising 0.4 percentage points from a month earlier and keeping the prosperity indices above 54 percent for nine straight months. At the same time, the Consumer Confidence Index reached 113.3 percent in June, considered a comparatively high rate in the past few years. We have also noted that the International Monetary Fund (IMF) and the Organization of Economic Cooperation and Development (OECD) have increased their forecasts ofChina's economic growth.

Based on the statistics, the good momentum of the national economy will further be maintained and explored amid stable growth. Thank you.

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