SCIO briefing on national economic performance in H1

Speaker:

Xing Zhihong, spokesperson and director general of the Department of Comprehensive Statistics, National Bureau of Statistics

Chairperson:

Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

Date:

July 17, 2017

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Mr. Xing Zhihong to introduce China's economic performance in the first half of 2017. Mr. Xing is the spokesperson and director general of the Department of Comprehensive Statistics of the National Bureau of Statistics (NBS). He will also answer some of your questions.

Now, let's welcome Mr. Xing to give his briefing.

Xing Zhihong:

Good morning. It's a pleasure to meet you again. As usual, I will make a brief introduction before the Q&A session.

In the first half of this year, China's economic performance was sound and stable with more visible good momentum. Generally speaking, the growth was steady; employment levels rose; prices were stable; incomes kept growing; the economic structure further improved. National economic development became more stable, coordinated and sustainable

According to preliminary statistics, the H1 national GDP was 38.149 trillion yuan, rising 6.9 percent year on year at comparable prices. The Q1 GDP and Q2 GDP both rose 6.9 percent yearly. The added value of the primary, secondary and tertiary sectors was 2.2 trillion yuan, 15.3 trillion yuan, and 20.65 trillion yuan respectively, rising 3.5 percent, 6.4 percent and 7.7 percent on a yearly basis. The Q2 national GDP grew 1.7 percent as compared with Q1.

First, the agricultural sector posted a sound performance with a bumper harvest in summer.

In summer, the yield of grains was 140.52 million metric tons, increasing 0.9 percent, or by 1.31 million metric tons, from last year. In H1, the total amount of pork, beef, mutton and poultry was 38.92 million metric tons, growing 1.0 percent yearly, or 0.8 percentage points higher than Q1.

Specifically, the amount of pork was 24.93 million metric tons, growing 0.8 percent, with the growth rate up by 0.6 percentage points. The total number of live hogs was 403.5 million, up 0.4 percent, while that of hogs slaughtered was 321.83 million, up by 0.7 percent, both year-on-year.

Second, industrial production accelerated with rapidly growing corporate profits.

In H1, the added value of industrial enterprises above designated size registered a year-on-year increase of 6.9 percent in real terms. This was 0.1 percentage point higher than Q1, or 0.9 percentage point higher than the same period of last year.

Regarding different types of ownership, the added value grew 6.2 percent in state holding enterprises,1.9 percent in collective enterprises, 7.1 percent in share-holding enterprises, and 6.7 percent in enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan.

Regarding different economic sectors, the added value fell 1.0 percent year-on-year in the mining industry, while growing 7.4 percent in the manufacturing industry and 8.1 percent in the production and supply of electricity, heat, gas and water. .

In particular, the manufacturing industry moved towards the medium-high end at a faster pace. The added value of the high-tech and equipment manufacturing industries grew by 13.1 percent and 11.5 percent respectively, 6.2 percentage points and 4.6 percentage points higher than the average of industrial enterprises above designated size, accounting for 12.2 percent and 32.2 percent of the total.

Regarding industrial enterprises above designated size, the sales-output ratio was 97.5 percent.Their added value in June grew 7.6 percent year-on-year, 1.1 percentage points higher than May, or up 0.81 percent month-on-month.

From January to May, the total profit of industrial enterprises above designated size was 2.9 trillion yuan, up 22.7 percent, 16.3 percentage points higher year-on-year. The profit rate from their primary activities was 6.05 percent, 0.45 percentage points higher than the same period of last year.

Third, the service sector grew at a relatively fast pace with a high prosperity index.

In H1, the Index of Services Production increased by 8.3 percent year-on-year, the same rate as Q1. Specifically, rapid growth was seen in the transport, storage and postal sector, the information transmission, software and information technology sector, as well as in the rental and business service sector. In June, the index grew 8.6 percent, 0.5 percentage points higher than May, or 0.6 percentage points higher than the same month last year.

In June, the Business Activity Index for services stood at 53.8 percent, 0.3 percentage point higher than the previous month and 1.6 percentage points higher than the same month last year.

Specifically, the index exceeded 59.0 percent in the producer service sector and logistics service sector, and exceeded 60 percent in the air transport sector, postal service sector, telecom, radio, TV, and satellite transmission sector, internet and software information technology service sector, monetary and financial service sector, insurance sector, among others. This indicated that the above mentioned sectors all saw robust development.

Regarding market demand and prospects, the New Order Index and Business Activities Expectation Index for the service sector were 50.7 percent and 60 percent respectively, 0.4 percentage point and 0.8 percentage point higher than last month respectively.

Fourth, the growth of investment holds steady with a slight slowdown, while the growth of investment in manufacturing and private investment rebounds.

In the first half of this year, fixed-asset investment (excluding rural households) reached 28,060.5 billion yuan, registering a year-on-year growth of 8.6 percent, down by 0.6 percentage points from the second quarter. Specifically, investment by State--holding investment reached 10,202.2 billion yuan, an increase of 12.0 percent; private investment totaled 17,023.9 billion yuan, up by 7.2 percent. The two figures in June were 0.4 and 4.4 percentage points higher compared with the first five months, and the same period last year respectively, accounting for 60.7 percent of total investment. Investment in the primary industry was 869.4 billion yuan, up 16.5 percent. The secondary industry received 10,580.7 billion yuan, up 4 percent, of which investment in manufacturing was 8,680.9 billion yuan, up 5.5 percent, 0.4 percentage points higher than that in the first five months, posting positive growth for the second consecutive month; it was 2.2 percentage points higher than the same period last year. The tertiary sector received 16,610.4 billion yuan, an increase of 11.3 percent. Specifically, investment in infrastructure reached 5,942.2 billion yuan, an increase of 21.1 percent, 0.2 percentage points higher in June than the first five months and the same period last year. The investment in high-tech industries grew rapidly and investment in hi-tech manufacturing and hi-tech services increased by 21.5 percent and 22.3 percent respectively, or 12.9 and 13.7 percentage points higher than the growth rate of the total investment. The fund in place for fixed-asset investment in the first half of this year was 28,627.5 billion yuan, up 1.4 percent year on year, shifting from negative growth to positive. The total planned investment in newly started projects was 23,725.8 billion yuan, a decrease of 1.2 percent year-on-year. This was 4.4 percentage points lower in June than in the first five months of the year. In June, fixed-asset investment (excluding rural households) increased by 0.73 percent month on month.

Fifth, the growth of investment in real estate development slowed down and the floor space of commercial buildings for sale continues to decrease.

In the first half of this year, total investment in real estate development was 5,061.0 billion yuan, 8.5-percent growth year on year, 0.6 percentage points lower in the second quarter than in the first. In particular, the investment in residential buildings went up by 10.2 percent. Total floor space of houses newly started in the first six months was 857.20 million square meters, up by 10.6 percent. The floor space of residential buildings newly started went up by 14.9 percent. The floor space of commercial buildings sold was 746.62 million square meters, up 16.1 percent, of which the floor space of residential buildings sold grew by 13.5 percent. The total sales of commercial buildings were 5,915.2 billion yuan, up 21.5 percent. Specifically, the sales of residential buildings rose 17.9 percent. The land space purchased by real estate development enterprises was 103.41 million square meters, up 8.8 percent year on year. By the end of June, the total floor space of commercial buildings for sale was 645.77 million square meters, 14.41 million square meters less than at the end of May. The fund in place for real estate development enterprises in the first half year reached 7,576.5 billion yuan, up by 11.2 percent year-on-year.

Sixth, the growth of market sales accelerates and online retailing shows strong momentum.

In the first half of the year, total retail sales of consumer goods reached 17,236.9 billion yuan, a year-on-year rise of 10.4 percent, 0.4 percentage points and 0.1 percentage point higher compared with that at the end of the first quarter and the same period last year respectively. Specifically, the retail sales of consumer goods by measure of units above designated size stood at 7,695.3 billion yuan, up by 8.7 percent. Analyzed by different areas, retail sales in urban areas reached 14,778.6 billion yuan, up 10.1 percent, while those in rural areas stood at 2,458.3 billion yuan, up by 12.3 percent. Grouped by consumption patterns, total income of the catering industry reached 1,854.6 billion yuan, up 11.2 percent; and the retail sales of goods totaled 15,382.2 billion yuan, up 10.3 percent. In particular, the retail sales of units above designated size reached 7,242.0 billion yuan, an increase of 8.8 percent. The sales of upgraded consumer goods witnessed fast growth. Specifically, the sales of cultural goods and office supplies grew by 11.8 percent, sports and recreational articles17.1 percent, furniture 13.4 percent and construction and decoration materials 13.9 percent. In June, total retail sales of consumer goods rose by 11.0 percent year on year, 0.3 percentage points higher than May, or 0.93 percent month-on-month.

In the first half of the year, online retail sales across China reached 3,107.3 billion yuan, year-on-year growth of 33.4 percent, or 1.3 percentage points higher in the second quarter compared to the first. In particular, online retail sales of physical goods were 2,374.7 billion yuan, an increase of 28.6 percent, accounting for 13.8 percent of total retail sales of consumer goods, or 2.2 percentage points higher than the same period last year.

Seventh, imports and exports grow rapidly with improved structure of foreign trade.

The total volume of imports and exports in the first half of 2017 was 13,141.2 billion yuan, an increase of 19.6 percent year-on-year. Specifically, the total value of exports was 7,209.7 billion yuan, up 15.0 percent; the total volume of imports was 5,931.5 billion yuan, an increase of 25.7 percent. The trade balance was 1,278.2 billion yuan in surplus. The import and export of general trade occupied a larger proportion, growing by 20.5 percent and accounting for 56.7 percent of the total volume, 0.4 percentage point higher than the same period last year. As for major exports, mechanical and electrical products grew by 14.6 percent, accounting for 57.2 percent of the total export volume. The import and export to some countries along the "Belt and Road" increased. In the first half year, trade with Russia, Pakistan, Poland and Kazakhstan increased by 33.1 percent, 14.5 percent, 24.6 percent and 46.8 percent respectively. In June, the total value of imports and exports was 2,404.3 billion yuan, a year-on-year increase of 19.8 percent. Of this total, the value of exports was 1,349.3 billion yuan, up by 17.3 percent; and that of imports was 1,055.0 billion yuan, up by 23.1 percent.

In the first half of this year, the export delivery value of the industrial enterprises above designated size reached 6,103.0 billion yuan, up 10.9 percent year on year, 0.6 percentage points higher than the first quarter. In June, the export delivery value of the industrial enterprises above designated size reached 1,172.3 billion yuan, up 11.7 percent.

Eighth, consumer prices rose moderately, while the increase of industrial prices slowed down.

In the first half of the year, national consumer prices rose 1.4 percent year-on-year, although the increase was flat after the first quarter. Among them, urban residents saw a consumer price rise of 1.5 percent, compared to 1 percent for rural residents. By category, food, tobacco and liquor prices fell 0.8 percent year-on-year, clothing prices rose 1.3 percent, housing 2.4 percent, daily necessities and services 0.8 percent, transport and communications 1.5 percent, education, culture and entertainment 2.5 percent, health care 5.4 percent, and other goods and services 3.3 percent. Among the food, tobacco and liquor prices, the price of grains went up 1.4 percent, pork fell 6.1 percent, while fresh vegetables fell 14.7 percent. In June, the national consumer price rose 1.5 percent year-on-year, the same rate as last month. The figure was down by 0.2 percent month-on-month.

In the first half of the year, the producer price for industrial products rose 6.6 percent year-on-year. There was a 0.8 percentage point reduction in the increase compared to the first quarter. In June, the producer price for industrial products rose 5.5 percent. The increase ratio had been flattening out. But compared with the previous month, the price actually dropped 0.2 percent. In the first half of the year, the purchasing price of industrial producers rose 8.7 percent yearly. In June, the price was up 7.3 percent year-on-year and down 0.4 percent month-on-month.

Ninth, the incomes of urban and rural residents grew rapidly, and the income gap between urban and rural areas continued to shrink.

In the first half of this year, the per-capita disposable income of the country's residents was 12,932 yuan, an increase of 8.8 percent year-on-year in nominal terms, with actual growth of 7.3 percent after deducting price factors. The growth rate accelerated by 0.3 percentage point as compared with the first quarter, and up 0.8 percentage point over the same period of last year. According to the place of permanent residence, the per capita disposable income of urban residents was 18,322 yuan, with actual growth of 6.5 percent after deducting prices factor; that of rural residents was 6,562 yuan for actual growth of 7.4 percent. The per capita income of urban residents was 2.79 times that of rural residents, 0.01 lower than that of the same period of last year. The median per capita disposable income of all residents was 11,238 yuan, an increase of 7 percent in nominal terms year-on-year. The per capita consumption expenditure of residents was 8,834 yuan, an increase of 7.6 percent in nominal terms for actual growth of 6.1 percent after deducting price factors. At the end of the second quarter, the total number of migrant workers from rural areas working in cities was 178.73 million, an increase of 3.64 million and 2.1 percent year-on-year. In the second quarter, the average monthly income of rural migrant workers was 3,405 yuan, an increase of 6.3 percent.

Tenth, the work of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas identified as weak was further advanced, and the policy effect continued to manifest itself.

Overcapacity was addressed in a well-ordered way. In the first half of the year, the industrial capacity utilization rate reached 76.4 percent, an increase of 3.4 percentage points over the same period of last year. Real estate inventory continued to be reduced. At the end of June, the floor space of commercial building for sale dropped by 9.6 percent year-on-year, 3.2 percentage points higher than that at the end of March. The leverage of enterprises was brought down. The debt-to-asset ratio of industrial enterprises above designated size at the end of May stood at 56.1 percent, 0.7 percentage point lower year-on-year. The costs of enterprises continued to be reduced. In the first five months, the cost per 100 yuan of revenue from the principle business of industrial enterprises above designated size was 85.62 yuan, 0.04 yuan less year-on-year. Areas of weakness were identified and strengthened. In the first half of this year, the investment in ecological protection and pollution treatment, management of water conservancy, transport, storage and postal services, as well as education grew by 46.0 percent, 17.5 percent, 14.7 percent and 17.8 percent respectively, markedly higher than the growth rate of the investment in fixed asset in the same period.

Generally speaking, the national economy has maintained the momentum of steady and sound development in the first half of 2017, laying a solid foundation for achieving the annual target and better performance. However, we must be aware that there are still many unstable and uncertain factors abroad, and long-term structural contradictions remain prominent at home. At the next step, uniting even closer around the CPC Central Committee with Comrade Xi Jinping as the core, we will stick to the general principle of seeking progress while maintaining performance stable, focus on supply-side structural reform, give central importance to improving the quality and returns of development, expand aggregate demand as appropriate, guide social expectations, strengthen the role of innovation in driving development, accelerate the replacement of old growth drivers with new ones, and promote economic transformation and upgrading, so as to cement the foundation for steady and sound development, and better fulfill the goal of national economic development this year. Thank you!