SCIO briefing on analysis of national economic performance of first three quarters of 2021
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E-mail China.org.cn, October 22, 2021
Xing Huina:
Thank you. Now the floor is open to questions, please identify your media outlet before raising questions.
CCTV:
Major economic indicators in the third quarter slowed down significantly compared with those in the first half of the year. Does this mean that China's economic recovery trend has changed, and economic momentum has weakened? Just now, you mentioned that the IMF has lowered China's economic growth forecast for the year. The current situation worldwide is grave. How do you view the pressure on China's economic growth in the fourth quarter? Thank you.
Yao Jingyuan:
China's economic growth in the third quarter slowed from that in the second quarter of the year. First, we should see that it's not only the case for China. The global economic growth and recovery weakened on the whole. That's why the IMF lowered China's growth rate from 8.1% to 8%, and cut the world's growth rate by a 0.1% from 5% to 4.9%. So, the economic slowdown in the third quarter is a universal phenomenon around the world.
Here I'd like to focus on China. Why did China's economy slow down? First, it is a result of rising commodity prices on international markets. As we know, due to the supply and demand mismatch as a result of the pandemic, and excess liquidity, the prices of raw materials including oil, natural gas, non-ferrous metals, ferrous metals and coal have risen sharply on the international markets this year. China is the biggest importer and exporter of commodities in the world, and the rise in the prices of raw material commodities is bound to be transmitted to China through imports. This is the main international impact on China's economy.
Second, it is a result of China's own situation at the current stage. We are getting a clearer picture of the reasons leading to the current downtrend, such as the epidemic and severe floods. As we know, several places in China reported sporadic cases, including major economic provinces like Guangdong and Jiangsu. The greater the impact on these provinces, the more the Chinese economy is affected. There are also impacts from floods. Henan is also a major economic province, and its economy was hit hard by unprecedented floods. The recent floods in Shanxi province forced 60 local coalmines to stop production, and the coal output dropped sharply. These are periodic factors. Moreover, if more detailed analysis is made, you will find that the current downtrend is not resulted from the lack of an inherent impetus driving growth. There is much room for Chinese economic growth. Someone asked me today if the downward trend could be changed. My answer is in the affirmative. We can adopt a series of policy measures to resolve these issues for the current stage. Take the coal supply shortage problem as an example. Coal prices rose due to the decline in coal production, which in turn led to losses in power generation, followed by decrease in power supply. Hence, power rationing happened in some provinces. Can the coal issue be solved? We will resume the production of coal mines affected by floods as soon as possible. A total of 72 coal companies in Inner Mongolia have restarted production. We will also increase coal imports. Chinese Premier Li Keqiang recently talked to Mongolian Prime Minister via video link to further promote the coal trading between the two countries. China tops the world with an installed capacity of power generation of 2,200 gigawatts. Thus, the coal shortage is a short-term problem and we can solve it.
We need to give more consideration to these short-term factors for the slowdown of China's economic growth in the third quarter from the second quarter. These short-term factors of the current period, overlapped with China's structural and periodic problems, made the issue more complicated. Therefore, in order to deal with the temporary problems, we need to step up efforts in structural reform to optimize the economic structure, and make counter-cyclical adjustment. In brief, China's economy still sustains a good inherent impetus, and we are able to reverse the slowdown.
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