Bloomberg:

I have two questions. First, in terms of the "worrisome developments" mentioned just now, what were the sources of these worries? How much came from the trade war with the U.S.? Second, it was just mentioned that the unemployment rate was 4.9 percent at the end of last year. We have read many media reports on large-scale dismissals before the New Year like those of Foxconn. The National Development and Reform Commission attributed it to migrant workers' earlier return home for the Spring Festival. Can the unemployment rate of 4.9 percent accurately describe China's situation? Thank you.

Ning Jizhe:

On your first question, how much of the worry stems from China-U.S. trade friction? This began to emerge from the second quarter of last year. In these circumstances, the Chinese government promptly adopted a policy of stabilizing employment, finance, foreign trade, foreign capital, investment and expectations. The trade friction does affect China's economic operation, but the effect is controllable overall. The data on imports and exports released some days ago also demonstrated this point, and judging from the data on China's economic performance, it is generally believed the international situation had a greater impact on China's economy in the fourth quarter. Here, I would like to share the data in December with you again.

In the past two months, some major economic indicators have risen while others have fallen, but the economy still registered a slower, but stable performance. For example, in December, major indicators on investment, consumption, performance of the industrial and service sectors were either flat or slightly up, but generally stable. Fixed asset investment from January to December rose 5.9 percent year over year. In December, retail sales of consumer goods rose 8.2 percent year over year, 0.1 percentage point higher than the growth rate in November. The added value of industrial enterprises with an annual revenue of 20 million yuan or more derived from their main business operations increased 5.7 percent year over year, 0.3 percentage point higher than that in November. The Index for Service Industry Production rose 7.3 percent year over year, 0.1 percentage point faster than November. Despite the decline of the Purchase Management Index of the manufacturing industry, the Index for Non-manufacturing Industry Business Activity increased, the service sector maintained its boom, and the Index for the Construction Industry rose sharply.

Trade friction affects not only the economies of China and the U.S., but also the global economy. In general, we are overcoming it and moving forward. Cooperation brings benefits for both countries, while confrontation brings mutual suffering. Cooperation brings gains to all countries, while confrontation brings losses to many. Working groups of the two countries maintained close communication and conducted many talks to implement the outcome of the meeting in Argentina on Dec.1 of their leaders, and achieved positive progress. It was important news for both countries and the global economy in general. I have personally noticed that the stock market or the tweets from the other side of the ocean had some positive effects on the talks. Economic globalization remains a long-term trend, and the Chinese economy is now deeply integrated into the world economy. The trade in goods between China and the U.S. exceeds US$ 630 billion. Mutually-beneficial win-win cooperation remains unchanged, and there is huge demand and potential for cooperation. Meanwhile, it should be noted that, in general, China's economic growth is led by domestic demand. In 2018, the contribution rate of consumption growth and investment growth combined surpassed 100 percent, while that of net exports was negative. Moreover, there is plenty of room for expansion in China's domestic market. Trade friction has not changed, and will not change the fundamentals of China's economic development. The country's resilience in withstanding pressure and coping with shocks, and China's overall economic growth amid stability, will remain unchanged.

Your second question is about the unemployment rate. We used the registered urban unemployment rate based on registrations with the labor authority; however, the National Bureau of Statistics began to release the surveyed urban unemployment rate last year. The latter had already been trialed internally for five years, and is considered more representative, as its system, approach and sample distribution all conform to the standards of International Labor Organization (ILO). As the ILO was most influenced by Europe, we adopted the same system and approach of surveyed unemployment rate as the European countries. In comparison, the statistical scope of the U.S. might be narrower. China's surveyed urban unemployment rate was 4.9 percent in December, while that of the U.S. was 3.9 percent. The annualized growth rate of the U.S. economy in the third quarter was 3.4 percent, while China's economy grew 6.6 percent in 2018. The surveyed unemployment rate in European countries was around 8 percent on average, but in some of the countries the figure was above 10 percent; the economic growth rate was around 2 percent. Japan's economy grew about 1 percent. Due to a labor shortage, Japan's surveyed unemployment rate was the lowest among major developed economies. The whole picture becomes clear by making a comparison of the surveyed unemployment rates of countries around the world.

There are individual cases like the one that just mentioned; in the meantime, new companies, including those worth tens of billions of yuan, are entering China, in both the service and manufacturing sectors. It is normal for foreign investment to come and go. Multinational enterprises are making readjustments globally, creating transfer employment and re-employment of some workers. Meanwhile, there is a shortage of technicians, skilled workers, and new-type talents in some companies in the coastal areas and in central and western China. Therefore, there is still a significant structural contradiction in employment. We will pay attention to the phenomena you just mentioned, promote implementation of policies giving priority to employment, so that people have jobs and lead an increasingly better-off life. Thank you for your questions.

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