Reuters:

Would you please preview the development prospects in 2022 and what are the main downward pressures and risks of China's economic growth this year? Will China scale up stabilizing economic growth to keep the major economic indicators within an appropriate range? Will China relax its policies to regulate and control the real estate market? Thank you.

Ning Jizhe:

You have raised several questions. The first two are relatively similar and involve this year's economic growth. This year marks the gradual recovery of China's economy, but the current external environment is grave and made complex by many uncertainties, and as you can see, domestic development is also under pressure. Despite these risks and challenges, taken overall, the momentum of sustained economic recovery, factors that keep the major economic indicators within an appropriate range, and conditions that support high-quality development all remain unchanged. The economy is expected to make progress while maintaining stability throughout the entire year.

First, China has been at the global forefront in terms of regularized pandemic control and made notable progress in coordinating epidemic control with economic and social development. The order of life and work is generally stable in the country, which has promoted sustained economic growth and ensured overall social stability. Up to now, China has reported the smallest number of confirmed COVID-19 cases and the lowest death toll among the world's major economies. China has administered 2.93 billion doses of COVID-19 vaccines, and a total of 1.22 billion people have been fully vaccinated – the most among the major economies of the world – providing a general line of defense for economic growth. 

Second, China's industrial supply system is complete. As we have mentioned many times, our country features every industrial category, with a complete industrial system and supporting system. In addition, the industrial and supply chains are resilient and can quickly adapt to the changes in demands of the market and thus boost the increase in supply. For example, the market suffered from a shortage of chips and containers last year. In addition to imports, China's own output of integrated circuits increased by 33.3%, and thus quickly increased supply. Facing a shortage of metal containers, China's output of containers grew 110.6%, allowing the shortage of chips and containers to be slightly alleviated. Amid the pandemic, the demand for office supplies for working at home boomed domestically and abroad. Some products might not otherwise sell well, but they have become popular after people needed them to work at home. The output of microcomputer equipment has not risen at such a fast rate for a long time, increasing by 22.3% in 2021. Meanwhile, the total output of smartphones last year was 1.7 billion, increasing by 9%, all of which indicates that there is a sizable demand. Working at home has also boosted the demand for eating at home, with fresh and frozen meat output increasing 24.5% and beverage output increasing 12%. All these examples indicate that we can produce what the market needs. It is the same for this year. As long as the media reports the world's demands, we will have market entities make efforts to produce and provide supplies, which will naturally promote economic growth, expand employment, and increase income. 

Third, the space for growth is large for China's super-large scale market. Our country has more than 1.4 billion people, with more than 400 million middle-income earners, which is the foundation for us to cope with various risks and challenges and build a strong domestic market. Due to the impact of the pandemic, retail sales of consumer goods decreased in 2020. But it grew back in 2021, reaching 44 trillion yuan. Although the growth rate was relatively low, it was not easy to achieve. The 44 trillion yuan in consumer goods sales represents a new milestone. The total investment was huge – the contribution rate of domestic demand to economic growth was 79.1% for the whole year – and final consumption was 65.4%, which highlights the significant role of the domestic market. 

Fourth, we also have the dividends of reform and opening-up. Diverse forms of ownership develop together. According to statistics, the value-added industrial growth of private enterprises scored double-digit growth. China's imports and exports to its major trade partners maintained rapid growth last year, according to statistics released by the General Administration of Customs a few days ago. Meanwhile, China is a major trade partner of more than 120 countries around the world. Up to the end of last year, China has signed BRI cooperation documents with 145 countries, and its total import and export volume with countries involved in the Belt and Road rose by more than 20%.

Fifth, China has outstanding economic governance capability. In recent years, China has continued to make fresh innovations in macro-control. We have enhanced targeted, well-timed, and precise regulation on the basis of range-based control, accumulating rich regulation experience and contributing to stable economic development. Since 2020, facing the spread of pandemic around the world, we have maintained strategic focus. Instead of resorting to massive stimulus measures, we put into place assistance policies based on market entities, which has promoted economic recovery and achieved remarkable results. At present, China's inflation rate and government debt are low. There is space for monetary policies, and we have at our disposal a fairly substantial toolkit for macro-control, which enables China to maintain stable economic performance.

Regarding quarterly growth, first, let us review the quarterly data over the past year. Just now, I announced the year-on-year growth rate and two-year average growth rate. Now, let us look at the quarter-on-quarter growth rate, that is, comparing each quarter with the previous quarter. The first quarter of 2021 saw a 0.3% increase in economic aggregate, rising a little compared with the fourth quarter of 2020; the second quarter of 2021 grew 1.3% from the first; the third quarter rose 0.7% compared with the second; and the fourth quarter increased 1.6% from the third. These figures show that China's economic aggregate kept expanding quarterly last year. The fourth quarter saw an increase of 3.43 trillion yuan over the third, with the quarter-on-quarter growth rate up 0.9 percentage point. Therefore, the Chinese economy is showing an increasingly stable development momentum.

Issues in the real estate industry are also quite important. The just-released data shows that our real estate market was generally stable in 2021. We adhered to the principle that housing is for living in rather than for speculation and actively implemented a long-term mechanism. We did not take real estate as a tool and means to stimulate short-term economic growth but made efforts to stabilize the price of land and houses, and the expectations, actively preventing potential risks. The real estate market remained generally stable.

First, real estate sales kept rising, and real estate transactions logged an overall increase. In 2021, the floor area of sold commercial housing nationwide reached 1.8 billion square meters, up 1.9% compared with the previous year, and the sales hit 18.19 trillion yuan, increasing 4.8% over the previous year.

Second, investment in real estate kept expanding. In 2021, the investment in real estate development was 14.76 trillion yuan, up 4.4% year on year, and residential investment rose 6.4%, 2 percentage points higher than the total investment in the industry. 

Third, real estate prices were generally stable. In December 2021, among 70 large and medium-sized cities, the prices of newly built commercial housing in first-tier, second-tier, and third-tier cities rose 4.4%, 2.8%, and 0.9%, respectively, year on year. 

Fourth, the development of government-subsidized housing continued to be pushed forward. From January to November 2021, China renovated about 1.94 million housing units in rundown urban areas and began the construction of 86,000 public rental housing units, with an investment of 913.1 billion yuan and 17.8 billion yuan, respectively.

The statistics showed that investment in real estate is expected to see stable and healthy development in 2022. Some of the just-released data is related to demand in the industry, which would be steadily unleashed. 

First, China's urbanization rate of permanent residents continued to increase last year, but the country is still in the development stage of urbanization. At the end of 2021, permanent residents in urban areas increased by 12.05 million year on year. Those people needed housing in cities while mostly maintaining their rural homes. In particular, the migrant population — defined by people who move a relatively long distance — reached 384.67 million, 8.85 million more than the previous year. The population who resided in areas other than where their household registration was registered was larger than the migrant population. All of these factors have brought about a new demand for housing. With the advancement of a new model of urbanization, residents' desire for normal housing consumption will turn into a reality. Then, with the support of financial and other policies, the urban housing needs, especially for improved housing, will continue to be released.

Moreover, the market supply of the real estate industry is gradually optimizing. With the steady advancement of real estate regulation policies, real estate developing enterprises maintain sound growth, and the industry is heading in an intensive, highly-efficient, long-term, healthy, and stable direction. As we see, the 2021 data showed that the added value of the real estate industry saw a negative growth in the fourth quarter, but the total added value reached 7.76 trillion yuan for the whole year. The added value of the construction industry amounted to 8 trillion yuan. The two together accounted for 14% of the country's GDP. We encouraged both the rental and purchase of housing, accelerated the development of the long-term rental housing market, promoted the development of government-subsidized housing, and ensured that the commercial housing market could better meet the rational demand of house purchasers. In this way, we are speeding up the establishment of a multi-tiered housing system including commercial housing and government-subsidized housing. The real estate market supply pattern will also be gradually put in place, featuring multi-suppliers, multi-channel guarantee, and a two-pronged approach of rental and commercial housing. From January to November 2021, a total of 120.5 billion yuan was invested to build 860,000 rental housing units across the country. 

Third, city-specific policies have helped promote a virtuous circle for the real estate industry. It is very important to develop the real estate industry according to local conditions. We have always kept in mind the principle that houses are for living in, not for speculation, and have maintained a stable housing price, stable land price, and stable expectations. To regulate the real estate market, we have implemented various policies in different cities. This is beneficial to both the smooth operation of the real estate market and ensuring the fulfillment of people's normal housing needs. In recent years, we have supported the renovation of buildings where middle- and low-income groups lived as well as old residential communities, boosting the healthy development of the industry. From January to November 2021, we began the renovation of 54,700 old urban residential communities, exceeding the annual targets.

Lastly, the growth of the real estate industry has driven the economic growth overall. In 2021, the added value of the real estate industry rose 5.2% year on year, adding 0.4 percentage point to overall economic growth; the added value of the construction industry increased 2.1%, boosting overall economic growth by 0.2 percentage point. From the perspective of industry expectations, in December 2021, the commercial activity index of the construction industry was 56.3%, maintaining a relatively high range of over 55% for 10 consecutive months. As the long-term mechanism of the real estate industry keeps improving and the effects of city-specific policies continue to emerge, the industry is expected to maintain a smooth running in 2022. Thank you!