Market News International:

I have two questions. First, we have noticed that, in September, the value-added growth rate of the industrial sector was 1.4 percentage points higher than August. Was that a sign of recovery? What was the reason behind the growth? My second question is: what's your view on the pork price and its development trend? Will this factor restrain the country's monetary policy? And there is one more question. Currently, the trade tension between China and the United States seems to be eased a little bit. What's your view on its influence on China's trade and domestic consumption in Q4?

Mao Shengyong:

Your first question is about the growth rate of the industrial sector. In the first nine months, the value-added growth rate of industrial enterprises above designated size was 5.6%, nearly the same with the figure achieved in the first eight months. Specifically, the figure in September was 1.4 percentage points higher than August. There were several reasons for the increase. First, when calculating the increase, the figure of last September was relatively low. Second, since September was the end of the quarter, some enterprises decided to accelerate their production. Third, due to market expectations, some enterprises had a stronger will to expand production. In the future, there will be both downward pressure and conducive factors for growth, leaving the growth rate of the industrial sector basically unchanged.

Your second question is about the pork price, CPI and the impact on monetary policy. In the recent months, the CPI grew at a relatively faster rate. In September, it increased 3.0% year-on-year, and food price increased even faster. About 70% of the increase of CPI came from the food sector. To be specific, the pork price increase was the main driver, as it rose almost 70%. Taking a broader view, the pork price drove up CPI by 1.65 percentage points, accounting 55% of the total growth rate. 

How to understand pork price's impact on CPI? The CPI had been rising at a faster speed, but this was mainly because of structural factors. The increase was mainly caused by the price rise of pork and some other food products. If we take a look at the core CPI, the figure only rose 1.5% in September, and 2.5% on average in the first nine months. The rise was mild. Therefore, the growth of CPI in September was caused by the price rise of some food products, pork in particular. 

In the next stage, the supply of industrial goods will be adequate, leaving their prices basically stable, and service products will see a mild price rise. As for the food sector, since a bumper harvest is expected, prices will remain basically stable. Regarding pork, since the African swine fever has been brought under control, and the previous policies launched by the central and local governments have shown significant effect, the problems concerning the supply and demand of pork will gradually be solved, and pork price will be return to a normal range. 

Regarding consumer price, some people were worried if there would be inflation, because the price rise approached 3%, while some others felt there was actually a deflationary trend, because the core CPI, with the price of food and energy excluded, actually rose at a slower rate from the first half of this year, and the PPI even dropped down year-on-year. In fact, there was neither inflation nor deflation, and the price level was basically stable. Therefore, there is adequate room to launch monetary policies, and the authorities will devise policies in accordance with the real situation.

Now, I'll answer the question about China-U.S. trade friction. Recently, substantial progress was achieved in the negotiations. This is good news. It will leave a positive influence on the two countries, and will send a positive message to the world. The global economy and international trade are developing towards a direction of less protectionism and more openness. The global economy, including that of China, will see better development.