Reuters:

I notice the contribution rate of imports and exports to economic growth was negative in the first three quarters. Does it mean that, although the indicators relating to exports were positive, the trade friction between China and the U.S. has already impacted the Chinese economy? What is your opinion on the impact of the friction in regard to the financial market, including exchange rates? Will it influence the real economy? Thank you.

Mao Shengyong:

As I mentioned just now, from the expenditure accounts, the contribution rate of final consumption expenditure to economic growth was 78 percent in the first three quarters, an increase of 14 percentage points over the same period last year. Net exports of both goods and services contributed minus 9.8 percent to economic growth, while the relevant figure for the same period last year was 1.3 percent. Does it mean the export performance exerted a negative impact on economic growth in the midst of the trade friction? I don't think so. Actually, both imports and exports maintained faster-than-anticipated growth in the first three quarters, with the growth rates increased month by month in the third quarter. Why was the contribution rate of net exports negative? I think the following explanation can account for it.

First, in measuring imports and exports, apart from trade in goods calculated by customs, we should also take into consideration the trade in services. Although China enjoys surplus in goods trade, it still faces a services trade deficit. We need to consider the two parts together. 

Second, we need to adjust the value of imports and exports according to international accounting principles, for example, using CIF to calculate import prices, and FOB for export prices.

Third, when talking about the speed of growth, we need to take into consideration both current and the constant prices. The price factors of services and goods imports and exports should be deducted and then the constant price can be computed. The figure differs from that released by Customs, as the statistical caliber is different. Another important factor is the base quota of the previous year. As imports and exports during the first three quarters of last year performed much better, so the growth rate was even higher than now.

With all those factors combined, though the contribution rate of imports and exports to economic growth this year is negative, the general foreign trade performance is within expectations, or even better than expected. The impact of China-U.S. trade friction on the import and export situation is not so apparent.

The second question is about the exchange rate. During the first three quarters, due to factors of the Fed raising interest rates and shrinking its balance sheet as well as the rising dollar index, major currencies all depreciated against the U.S. dollar, and those in some developing countries depreciated sharply. Against such a backdrop, the exchange rate of RMB against the dollar is relatively stable and performed better compared with other major currencies. In addition, the Chinese economy is running smoothly at present, and the momentum can be well maintained in the near future. The goods and services imports and exports continue to run smoothly and the balance of international payments is stable, therefore the exchange rate can also generally be kept stable.

Hu Kaihong:

Now, the news conference concludes. Thank you all. Thank you, Director Mao.

By Li Xiaohua, Chen Xia, Huang Shan, Guo Yiming, Zhang Junmian, Mi Xingang, Li Huiru, Zhang Liying, Li Jingrong, Li Yang, Wang Qian, Wang Wei, Yuan Fang, Geoffrey Murray