SCIO briefing on China's economic performance in H1 2021
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E-mail China.org.cn, July 22, 2021
CCTV:
We learnt from this morning's press conference that the service sector continued to recover in the first half of this year. What's your opinion on the role of service sector in the overall economic recovery? Since the start of the pandemic, modern service industry, including information transmission, software and information technology services, have demonstrated favorable momentum, but the growth rate of added value of some parts of the service sector has been relatively low. How would you evaluate that? Thank you.
Xu Xianchun:
Thank you! The National Bureau of Statistics (NBS) released the statistics of the national economy for the first half of the year this morning. During the first half of this year, the tertiary industry increased by 11.8% year-on-year, with an average two-year growth of 4.9%. This was lower than the secondary industry, as the secondary industry increased by 14.8% year-on-year, with an average two-year growth of 6.1%. However, the total added value of the tertiary industry accounts for a relatively high proportion of GDP, which was 55.7% in the first half of the year, and its contribution to economic growth reached 53%. So, it plays a vital role in stimulating the economic growth.
The growth of added value of the tertiary industry was polarized in the first half of the year. The growth rate of modern service industry was relatively fast. Specifically, the added value of information transmission, software and information technology services increased by 20.3% year-on-year, with an average two-year growth of 17%. In the first five months of the year, the total profits of large high-tech services businesses went up by 27.4% year-on-year, with an average two-year growth of 12.5%, 4.2 percentage points higher than that of large services businesses as a whole. At the same time some parts of the service sector had lower growth rates in added value, such as wholesale and retail trades. The average two-year growth was relatively low, which is significantly lower than the growth rate in the same period in 2019 before COVID-19 outbreak. The contact services sector, such as accommodation, catering, rental and business services, was more severely affected by the epidemic and still grew negatively on average over this two-year period. In short, during the first half of the year, the growth of added value in the service sector was polarized. The growth rate of modern service industry was relatively fast, while the growth rates of contact type and traditional services were relatively low, with some still witnessing negative growth.
In fact, modern service industry has been demonstrating favorable momentum in recent years. For example, from 2017 to 2019, the added value of information transmission, software and information technology services grew at an average annual rate of about 23%. We know that the economic growth rate has fallen back during this period. China's GDP increased 6.9%, 6.7% and 6% respectively in 2017, 2018, 2019. The added value of information transmission, software and information technology services maintained a growth rate of more than 20%, which played an important role in slowing down the decline in economic growth. Hobbled by the coronavirus, China's GDP shrank 6.8% in the first three months of 2020. Under these circumstances, information transmission, software and information technology services rose by 13.2% against the tide and bucked the trend during the epidemic, contributing 0.6 percentage point to the GDP growth. If there was no 13.2% growth in information transmission, software and information technology services, the GDP decline would not be 6.8%. If this sector had also grown negatively, the decline in GDP would have been even greater. The added value of information transmission, software and information technology services maintained rapid growth in the second quarter, the third quarter and the fourth quarter. They were up by 15.7%, 18.8% and 19.7% respectively. The increasing quarter-on-quarter trend played an important role in the quarterly recovery of economic growth.
Therefore, the modern service industry has played an crucial role in stimulating economic growth, inhibiting the declining economic growth rates in previous years, slowing down the economic decline in the first quarter of last year, and making contributions to resuming economic growth in the following three quarters of 2020. With the rapid development of information technology, I believe that the modern service industry will maintain a relatively rapid growth, and will be a vital driving force for China's economic growth in the future. Thank you!
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