CNR:

Having noted the sustained recovery of fixed-asset investment in the first half of 2021, what do you think of investment's role in stimulating economic growth? The two-year average investment growth rate still shows significant disparities compared with pre-epidemic levels. What measures should be taken to expand effective investment in the next phase? Thank you.

Liu Aihua: 

Thank you for your question. You focused on the estimation of China's investment and its trends in the next phase. In terms of monthly changes, the country's investment has seen a sustained and stable recovery in the first half of this year. The two-year average growth of fixed-asset investment in the first six months was 4.4%, up 1.5 percentage points from the first quarter, which was an acceleration. Investment has played a key role in further optimizing the supply structure regarding three aspects. First, the investment in high-tech industries grew rapidly. In the first half of 2021, the two-year average growth of investment in high-tech industries rose 14.6%, up 4.7 percentage points from the first quarter, among which the growth of investment in high-tech manufacturing and service industries sped up. Second, the investment in social sectors grew rapidly, with an average two-year growth of 10.7%, 1.1 percentage points faster than that of the first quarter, among which the investment in the health sector and social work went up by more than 20%. Third, the growth of private investment also accelerated. In the first half of the year, the two-year average growth of private investment grew by 3.8%, up 2.1 percentage points from the first quarter. Investment in high-tech industries has strong kinetic energy, while the investment in the social sectors shores up weaknesses, and the private investment reflects the market vitality. With the acceleration of all of these areas, effective investment has shown to play a key role in further optimizing the supply structure.

As for the next phase, the advantages supporting continued investment recovery are increasing. First, market vitality has gradually increased. According to the profits of industrial enterprises and service enterprises above the designated size from January to May, the performance of enterprises has improved, which will enhance their confidence and ability in investment. Second, financial support is relatively strong. In the first half of the year, the funds in place for fixed-asset investment rose by 16.8% year-on-year, and the growth rate exceeded that of the investments. Third, policies to stabilize investment continue to show positive effect. A batch of major projects set out in the 14th Five-year Plan is being deployed and advanced. As we know, in June, more than 10,000 large-scale projects worth 50 million yuan ($7.74 million) and above were newly included, an increase of 11.6% from the previous month. Fourth, in the long run, new industrialization, IT application, urbanization, and agricultural modernization all offer enormous opportunities for investment. There is huge potential for investment in promoting the renovation of urban infrastructure, implementing the rural vitalization strategy, optimizing and stabilizing the industry chains and supply chains, and accelerating the transformation and upgrading of traditional industries. Therefore, we believe that investment in the next phase will continue to maintain sustained recovery on the whole. Thank you.