Bloomberg:

My question is about wages. So, wage growth is about 5.8%, I think, which is slightly faster than GDP but is still not back to the pre-pandemic levels of above 8% expansion. How will that affect the sustainability of any consumption recovery? And how do you expect that consumption will grow faster than GDP when wages are basically only growing as fast as GDP? Thank you.

Fu Linghui:

Thank you for your questions. The wage growth you mentioned likely refers to the real increase in residents' income. In the first half of the year, the nationwide per capita disposable income of residents saw real growth of 5.8% and nominal growth of 6.5% year on year, maintaining a relatively rapid growth rate. About the pre-pandemic levels of 8% expansion that you mentioned, I believe that was nominal rather than real growth. As for the situation this year, China's economy has shaken off the impact of the pandemic, demonstrating a momentum of recovery, and is gradually picking up. Residents have witnessed expanding employment channels and steadily increasing incomes. In the first half of the year, per capita disposable income of residents grew 5.8% year on year, 2 percentage points faster than that of the first quarter. This is the real growth rate, taking into account price factors, which indicates a steady rise in residents' incomes and its positive role in boosting consumption. As production, allocation, circulation, consumption, and other aspects of economic activity gradually improve, income growth will further stimulate and support consumption.

Overall, final consumption expenditure accounted for 77.2% of economic growth in the first half of the year, and it is expected to continue to be a driving force in the upcoming period. China's consumption structure is undergoing rapid evolution and development. The increase in incomes and the enhancement of the consumption environment are conducive to the sustained expansion of consumption, and they will play an increasingly critical role in facilitating the transition toward high-quality economic growth. Thank you.

Shou Xiaoli:

We will have one last question.

ThePaper.cn:

In the first half of this year, the profits of China's industrial enterprises above designated size continued to fall by double digits. When can these enterprises bear less pressure? What does the NBS expect the trend to be in the year's second half? Thank you.

Fu Linghui: 

Thank you for your questions. Since the beginning of this year, the overall performance of the industrial sector has seen a stable recovery. The progress of the industrial sector and corporate performance are intimately connected. As market demand gradually recovered during the first half of the year, and the measures put in place to strengthen and improve the real economy as well as promote industrial transformation and upgrading took effect, overall industrial production maintained stable growth. Moreover, the structure was optimized, the new growth momentum was steadily gathered, and the development quality improved steadily.

First, industrial production has experienced a gradual recovery. The total value added by industrial enterprises above designated size grew by 3.8% year on year in the first half of the year, which is 0.8 percentage point faster than in the first quarter. Among the 41 major industrial sectors, 26 maintained growth in the year's first half, accounting for 63.4% of the total. 331 out of 620 major industrial products saw production growth. In other words, more than 50% of them achieved growth.

Second, steady progress has been made in industrial upgrading. The technological intensity of industrial production continues to improve. In the first half of the year, the value added by equipment manufacturing increased by 6.5% year on year, 2.7 percentage points faster than that of industrial enterprises above designated size. It contributed to 53.9% of the growth of all industrial enterprises above designated size and effectively supported the recovery of industrial production. Specifically, the value added of electrical machinery and equipment manufacturing saw a year-on-year increase of 15.7%, and that of auto manufacturing grew by 13.1% year on year.

Third, advanced manufacturing has experienced relatively rapid growth. With the growth momentum of the aviation and aerospace sectors, and the commercial operation of China's self-developed large passenger aircraft, the enabling role of advanced manufacturing has become increasingly prominent. In the first half of the year, the value added by aircraft, spacecraft, and equipment manufacturing saw a year-on-year increase of 22.9%. All sectors have strengthened efforts to make breakthroughs in key fields and links concerning semiconductors, and related production has grown rapidly. In the first half of the year, the manufacturing of special equipment for semiconductor devices and electronic and electromechanical components increased by 30.9% and 46.5% year on year, respectively.

Fourth, the green transformation of industries has witnessed notable improvement. The new energy vehicle (NEV) sector has shown sound momentum and helped drive the growth of related products. In the first half of the year, NEV output increased by 35% year on year, and that of lithium-ion batteries and charging piles surged 46.4% and 53.1% year on year, respectively. Products related to clean energy also saw rapid growth. In the first half of the year, the output of photovoltaic cells, wind turbines, and hydroelectric generators increased by 54.5%, 48.1%, and 32.3% year on year, respectively.

Fifth, the production of intelligent products and new materials has picked up. Intelligent consumer goods have experienced rapid production growth. In the first half of the year, the manufacturing of smart consumer equipment increased by 12%. Specifically, the manufacturing of intelligent vehicle equipment and unmanned aerial vehicles grew by 36.3% and 12.5%, respectively. The supply of new materials also increased. In the first half of the year, the output of ultra-clear glass, polysilicon, and monocrystalline silicon for the solar energy industry increased by 89.1%, 86.4%, and 54.1%, respectively.

Regarding the profits of industrial enterprises mentioned in your question, we believe that the sustained recovery of industrial production has laid a solid foundation for improving enterprise profits. From January to May, the decline in profits of industrial enterprises above designated size narrowed by 1.8 percentage points compared to that from January to April. This trend constitutes an improvement for three consecutive months. First, the profits of equipment manufacturing and other manufacturing sectors continued to recover. During the January-May period, various policy measures designed to bolster manufacturing took effect. The decline in profits in the manufacturing sector narrowed by 3.3 percentage points compared to that in the first four months. This reduction resulted in a decline in the profit decrease of industrial enterprises above designated size by 2.5 percentage points, which played a significant role in improving the profits of industrial enterprises. Among them, the profits of equipment manufacturing in May saw a year-on-year increase of 15.2%, maintaining double-digit growth for two consecutive months. Second, profits in the electricity, gas, and water-related sectors grew rapidly. From January to May, profits from the production and supply of electricity, heat, gas, and water increased by 34.8% year on year, 0.7 percentage point faster than during the January-April period. This growth has continuously driven the profit increase of industrial enterprises.

Although industrial production is currently recovering steadily and the quality of development continues to improve, the level of connection between industrial production and sales still needs to be enhanced. Despite anticipated challenges, China is expected to see an increasingly solid foundation for the recovery of the industrial economy and experience continuous improvements in the profitability of industrial enterprises. This positive outlook can be attributed to factors such as economic recovery, increased market demand, enhanced capacity for innovative development, the emergence of new growth drivers, and the implementation of policies and measures aimed at strengthening the industrial sector. Thank you.

Shou Xiaoli:

Thank you, Mr. Fu and friends from the media. Today's press conference is hereby concluded. Goodbye.

Translated and edited by Xu Xiaoxuan, Wang Yiming, Zhang Jiaqi, Zhang Rui, Cui Can, Ma Yujia, Liu Caiyi, Wang Wei, Yan Bin, Liu Qiang, Li Huiru, Zhu Bochen, Zhou Jing, David Ball, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.