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Speaker:

Mr. Fu Linghui, spokesperson of the National Bureau of Statistics (NBS) and director general of the Department of Comprehensive Statistics of the NBS

Chairperson:

Ms. Shou Xiaoli, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

April 18, 2023

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Shou Xiaoli:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). This is a regular briefing on China's economic data. Today, we are joined by Mr. Fu Linghui, spokesperson of the National Bureau of Statistics (NBS) and director general of the Department of Comprehensive Statistics of the NBS. Mr. Fu will brief you on China's economic performance in the first quarter of 2023, and then take your questions.

Next, I'll give the floor to Mr. Fu.

Fu Linghui:

Friends from the media, good morning. I'm very glad to attend today's press conference. As usual, I will start by briefing you on the economic performance in the first quarter of this year, and then take your questions.

In short, China's national economy got off to a generally stable start in the first quarter.

In the first quarter, faced with the grave and complex international environment as well as arduous tasks to advance reform and development, and ensure stability at home, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments strictly implemented the decisions and arrangements made by the CPC Central Committee and the State Council, made economic stability the top priority, pursued progress while ensuring stability, fully and faithfully applied the new development philosophy on all fronts, accelerated efforts to foster a new development pattern, focused on promoting high-quality development, better balanced domestic and international imperatives, coordinated the COVID-19 prevention and control work with economic and social development, ensured both development and security, and gave priority to ensuring stable growth, employment and prices. As a result, a smooth transition in COVID-19 prevention and control to the new phase was secured in a relatively short time, production and demand registered a stable recovery, employment and prices were kept generally stable, residents' incomes continued to rise, market expectations saw a significant improvement, and the national economy got off to a good start.

According to preliminary estimates, the gross domestic product (GDP) in the first quarter reached 28,499.7 billion yuan, up by 4.5% year on year at constant prices, or up by 2.2% compared with the fourth quarter of 2022. By industry, the value added of the primary industry was 1,157.5 billion yuan, up by 3.7% year on year; that of the secondary industry was 10,794.7 billion yuan, up by 3.3%; and that of the tertiary industry was 16,547.5 billion yuan, up by 5.4%.

First, agricultural production was stable and animal husbandry grew steadily. 

In the first quarter, the value added of agriculture (crop farming) witnessed a year-on-year increase of 3.6%. The winter wheat growth was generally normal and the spring farming and preparations were carried out in an orderly manner. According to the year-round planting intention survey, the planting area intended for wheat, rice and corn nationwide was generally stable. In the first quarter, the output of pork, beef, mutton and poultry was 24.56 million metric tons, up by 2.5% year on year. Of this total, the outputs of pork, beef, mutton and poultry rose by 1.9%, 5.1%, 5.0% and 3.2%, respectively. The output of milk was up by 8.5% and that of eggs up by 2.8%. At the end of the first quarter, the number of pigs registered in stock was 430.94 million, up by 2.0% year on year; and 198.99 million pigs were slaughtered, up by 1.7% in the first quarter.

Second, industrial production recovered gradually and the expectations of enterprises improved generally.

The total value added of industrial enterprises above designated size grew by 3.0% year on year in the first quarter, 0.3 percentage point higher than that in the fourth quarter of 2022. In terms of sectors, the value added of mining increased by 3.2%, that of manufacturing increased by 2.9%, and that of production and supply of electricity, thermal power, gas and water increased by 3.3%. The value added of equipment manufacturing increased by 4.3%, 2.5 percentage points higher than that in the first two months. Analysis by ownership types showed that the value added of state holding enterprises was up by 3.3%; that of share-holding enterprises was up by 4.3%; that of enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan was down by 2.7%; and that of private enterprises was up by 2.0%. In terms of products, the production of solar cells and new-energy vehicles increased by 53.2% and 22.5%, respectively. In March, the value added of industrial enterprises above designated size grew by 3.9% year on year, 1.5 percentage points higher than that in the first two months, or up by 0.12% month on month. In March, the Manufacturing Purchasing Managers' Index (PMI) stood at 51.9%, and the Production and Operation Expectation Index was 55.5%. In the first two months, the total profit of industrial enterprises above designated size was 887.2 billion yuan, down by 22.9% year on year.

Third, the service sector rebounded markedly and contact-intensive services grew quickly.

In the first quarter, the value added of services rose by 5.4% year on year, 3.1 percentage points higher than that in the fourth quarter of 2022. Specifically, the value added of accommodation and catering, information transmission, software and information technology services, financial intermediation, leasing and business services and wholesale and retail grew by 13.6%, 11.2%, 6.9%, 6.0% and 5.5%, respectively. In March, the Index of Services Production increased by 9.2% year on year, 3.7 percentage points higher than that in the first two months. Specifically, the Index of Services Production of accommodation and catering, information transmission, software and information technology services and transport, storage and post increased by 29.9%, 12.0% and 11.9%, respectively, which were 18.3 percentage points, 2.7 percentage points and 7.7 percentage points higher than in the first two months. In the first two months, the business revenue of service enterprises above designated size grew by 3.4% year on year. In March, the Business Activity Index for Services stood at 56.9%, and the Business Activity Expectation Index was 63.2%. Among these, the Business Activity Index for industries including retail, railway transportation, road transportation, air transportation and leasing and business services were above 60.0%.

Fourth, market sales recovered quickly and upgraded goods increased largely.

In the first quarter, the total retail sales of consumer goods reached 11,492.2 billion yuan, up by 5.8% year on year, and that in the fourth quarter of 2022 was down by 2.7%. Analyzed by different areas, the retail sales of consumer goods in urban areas reached 9,966.4 billion yuan, up by 5.7%, and that in rural areas was 1,525.8 billion yuan, up by 6.2%. Grouped by consumption patterns, the retail sales of goods were 10,278.6 billion yuan, up by 4.9%; and the income from catering was 1,213.6 billion yuan, up by 13.9%. Goods for basic living sold well, with the retail sales of clothes, shoes, hats and textiles as well as of grain, oil and food by enterprises above designated size increasing by 9.0% and 7.5%, respectively. Sales of upgraded goods went up markedly. The retail sales of gold, silver and jewelry and of books, newspaper and magazines by enterprises above designated size grew by 13.6% and 13.4%, respectively. Online retail sales reached 3,286.3 billion yuan, up by 8.6%. Specifically, the online retail sales of physical goods were 2,783.5 billion yuan, up by 7.3%, accounting for 24.2% of the total retail sales of consumer goods. In March, the total retail sales of consumer goods went up by 10.6% year on year, 7.1 percentage points higher than that in the first two months, or up by 0.15% month on month.

Fifth, investment in fixed assets increased steadily and investment in high-tech industries grew quickly.

In the first quarter, investment in fixed assets (excluding rural households) reached 10,728.2 billion yuan, up by 5.1% year on year, the same as that of the previous year. Specifically, investment in infrastructure grew by 8.8% year on year; that in manufacturing grew by 7.0%; and that in real estate development declined by 5.8%. The floor space of commercial buildings sold reached 299.46 million square meters, down by 1.8%; and the total sales of commercial buildings were 3,054.5 billion yuan, up by 4.1%. By industry, investment in the primary industry increased by 0.5%, that in the secondary industry grew by 8.7%, and that in the tertiary industry rose by 3.6%. Private investment went up by 0.6%. Investment in high-tech industries grew by 16.0%, of which investment in high-tech manufacturing and high-tech services grew by 15.2% and 17.8%, respectively. In terms of high-tech manufacturing, investment in manufacturing of electronic and communication equipment as well as in manufacturing of medical equipment, measuring instruments and meters grew by 20.7% and 19.9%, respectively. In terms of high-tech services, investment in e-commerce services and services for transformation of scientific and technological achievements grew by 51.5% and 51.3%, respectively. Investment in social sectors grew by 8.3%. Specifically, investment in health and education grew by 21.6% and 6.2%, respectively. In March, investment in fixed assets (excluding rural households) declined by 0.25% month on month.

Sixth, imports and exports of goods kept growing and trade structure continued to be optimized.

In the first quarter, the total value of imports and exports of goods was 9,887.7 billion yuan, an increase of 4.8% year on year. The total value of exports was 5,648.4 billion yuan, up by 8.4%. The total value of imports was 4,239.3 billion yuan, up by 0.2%. The trade balance was 1,409.0 billion yuan in surplus. The imports and exports of general trade increased by 7.9%, accounting for 65.3% of the total value of imports and exports, 1.9 percentage points higher than that of the same period last year. Imports and exports by private enterprises grew by 14.4%, accounting for 52.4% of the total value of imports and exports. In March, the total value of imports and exports was 3,709.4 billion yuan, up by 15.5% year on year. The total value of exports was 2,155.2 billion yuan, up by 23.4%; and that of imports was 1,554.2 billion yuan, up by 6.1%.

Seventh, consumer prices rose mildly, and producer prices for industrial products dropped year on year.

In the first quarter, the consumer price index (CPI) rose by 1.3% year on year. The prices for food, tobacco, and alcohol went up by 2.9% year on year. Clothing prices went up by 0.7%. Housing prices went down by 0.2%. Articles and services for daily use went up by 1.2%. Transportation and communication prices went up by 0.1%. Education, culture, and recreation prices went up by 1.7%. Medical services and healthcare prices went up by 0.9%. Other articles and services prices went up by 2.7%. In terms of food prices, fresh fruit prices went up by 11%, pork prices went up by 8.5%, grain prices went up by 2.5%, and fresh vegetable prices went down by 2.9%. The core CPI, excluding food and energy prices, grew by 0.8% year on year. In March, the country's CPI went up by 0.7% year on year and down by 0.3% month on month.

In the first quarter, the producer prices for industrial products went down by 1.6% year on year. Specifically, the prices in March dropped by 2.5% year on year, and maintained the same level month on month. In the first quarter, the purchasing prices for industrial producers went down by 0.8% year on year. Specifically, in March, the prices dropped by 1.8% year on year, and maintained the same level month on month.

Eighth, employment was generally stable, and the surveyed unemployment rate in urban areas declined.

In the first quarter, the urban surveyed unemployment rate averaged 5.5%, down by 0.1 percentage point compared with the fourth quarter of last year. In March, the surveyed unemployment rate in urban areas was 5.3%, down by 0.3 percentage point compared with the previous month. The surveyed unemployment rate of population with local household registration was 5.1%, and that of population with non-local household registration was 5.6%, of which the rate of population with non-local agricultural household registration stood at 5.3%. Specifically, the surveyed unemployment rates of the population aged from 16 to 24 and from 25 to 59 were 19.6% and 4.3%, respectively. Among the population aged 25 to 59, surveyed unemployment rates of those with junior secondary school education or below, with senior secondary school education, with junior college education, or with university education or above were 4.8%, 4.8%, 4%, and 3.1%, respectively. The urban surveyed unemployment rate in 31 major cities was 5.5%, 0.2 percentage point lower than that of the previous month. Employees of enterprises worked 48.7 hours per week on average. By the end of the first quarter, the number of rural migrant workers totaled 181.95 million.

Ninth, residents' incomes increased steadily, and rural residents' incomes grew faster than those of urban residents. 

In the first quarter, the country's per capita disposable income was 10,870 yuan, a nominal growth of 5.1% year on year, which was 0.1 percentage point faster than that of the previous year; real growth was 3.8% after deducting price factors. In terms of permanent residence, the per capita disposable income of urban residents was 14,388 yuan, a nominal growth of 4% year on year and a real growth of 2.7%, while the per capita disposable income of rural residents was 6,131 yuan, a nominal growth of 6.1% year on year and a real growth of 4.8%. In terms of income sources, the country's per capita salary income, net business income, net property income, and net income from transfers grew by 5%, 5.8%, 4.1%, and 5.1% in nominal terms, respectively. The median nationwide per capita disposable income of residents was 8,895 yuan, with a nominal growth of 4.6% year on year.

Generally speaking, in the first quarter, the national economy showed a steady recovery and made a positive start. This was due to multiple policies and measures aimed at stabilizing growth, employment, and prices that took effect early on, exhibiting positive effects as COVID-19 prevention and control measures shifted to their new phase in a rapid and steady way. However, it's important to note that the international environment is still complex and volatile and that inadequate domestic demand remains prominent, meaning that the foundation for economic recovery is not yet solid. To address these challenges, we must take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline, fully implement the guiding principles of the 20th CPC National Congress as well as the first and second plenary sessions of the 20th CPC Central Committee, act in line with the plans and arrangements made at the Central Economic Work Conference and the “two sessions,” make economic stability the top agenda, and pursue progress while ensuring stability. We must fully and faithfully apply the new development philosophy on all fronts, accelerate efforts to create a new pattern of development, strive to pursue high-quality development, implement macro policies in a scientific and targeted manner, and unleash the potential of domestic demand through a variety of means and channels. We must intensify efforts to deepen reforms, promote high-standard opening up, advance the overall improvement of economic performance continuously, and endeavor to achieve the effective enhancement of quality and reasonable growth so as to ensure a good start for building a modern socialist country in all respects.

Thank you.

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Shou Xiaoli:

Thank you, Mr. Fu. The floor is now open for questions. Please identify the media organization you work for before asking your questions.

Shenzhen TV:

What contributed to a rebound in industrial production in the first quarter? What positive changes have emerged in industrial production and operation? Will industrial production continue to accelerate in the future? Thank you.

Fu Linghui:

Industrial production achieved steady growth in the first quarter. Since the beginning of this year, there have been several positive changes in industrial production, due to a rapid and stable shift of epidemic prevention and control measures, the implementation of policies for stabilizing growth, a rebound in market demand, and an accelerated recovery of industrial and supply chains. In the first quarter, the value added of industries above designated size increased by 3% year on year, an increase of 0.3 percentage point from the fourth quarter of last year. In March, it increased by 3.9%, an increase of 1.5 percentage points from the January-February period. There are several characteristics.

First, most industries have maintained growth. In the first quarter, of the 41 major industrial categories, 23 maintained year-on-year growth, accounting for over 50% of the total. Compared with the fourth quarter of last year, 20 industries saw rapid growth in their value added.

Second, equipment manufacturing has played a significant role in supporting industrial growth. As China advances its industry upgrading and strengthens the development of equipment manufacturing, industrial production has maintained relatively fast growth. In the first quarter, the value added of equipment manufacturing increased by 4.3% year on year, which was 1.3 percentage points higher than that of industries above designated size. Its contribution to the growth of industries above designated size reached 42.5%. Among them, the value added of electrical machinery, and railway and shipping industries increased by 15.1% and 9.3%, respectively.

Third, the raw material manufacturing industry grew rapidly due to steady economic recovery and stable investment growth. In the first quarter, the value added of raw material manufacturing increased by 4.7% year on year, which was 1.7 percentage points higher than that of industrial enterprises above designated size. Among them, the value added of the ferrous metal smelting and rolling processing industry and the non-ferrous metal smelting and rolling processing industry increased by 5.9% and 6.9%, respectively. In terms of products, the output of steel and 10 kinds of non-ferrous metals increased by 5.8% and 9%, respectively, in the first quarter.

Fourth, micro and small enterprises recovered their production. In the first quarter, the value added of micro and small enterprises above designated size increased by 3.1% year on year, and the growth rate was faster than that of all industrial enterprises above designated size. The questionnaire survey showed that the business climate index of micro and small industrial enterprises under designated size increased by 1.7 percentage points from the fourth quarter of last year, and the proportion of enterprises with good production and operation increased by 1.2 percentage points.

In addition, business expectations are higher. The manufacturing PMI has been above 50 for three consecutive months. Green products such as new-energy vehicles and solar cells have maintained double-digit growth, and the green transformation of industries has continued to grow.

But we must also remain clear-eyed about the complex and grim international environment, including uncertainties in external demand growth, constraints on and insufficiency of domestic market demand, industrial products' falling prices, and difficulties faced by companies. Going forward, we will continue to implement various policies and measures for stabilizing growth, focus on boosting domestic demand, deepen supply-side structural reform, upgrade traditional industries, foster and strengthen emerging industries, and push for a dynamic balance between supply and demand at a higher level and the healthy development of industries.

Thank you.

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CCTV:

The Chinese economy has stabilized and rebounded in the first quarter of this year. What are the main features? What is your assessment of the economy in the first quarter? Thank you.

Fu Linghui:

I know there is a lot of interest in China's economic performance in the first quarter. Since the beginning of this year, all regions and government departments have thoroughly implemented the decisions and plans of the Central Committee of the Communist Party of China and the State Council, given priority to stability, sought progress while maintaining stability, promoted high-quality development, and made great efforts to ensure steady growth, employment, and prices. We have adopted proactive and effective macro policies, and made steady and quick shifts in terms of epidemic prevention and control. Work and life have been returning to normal at a faster pace, production and demand have stabilized and rebounded, jobs and prices have become basically stable, business expectations have significantly improved, positive factors have been cumulatively increasing, and the economy has gotten off to a good start. The main features are as follows.

First, economic growth has stabilized and rebounded. In the first quarter, GDP grew by 4.5% year on year, 1.6 percentage points higher than that of the fourth quarter of last year and 2.2% up from the previous quarter. It has grown faster than in the past. Agriculture has maintained steady growth. Preparation for spring planting has been advancing in an orderly manner. Animal husbandry has grown steadily, and agricultural production has remained stable. In the first quarter, the value added of agriculture, forestry, animal husbandry, and fisheries increased by 3.8% year on year, and the output of pork, beef, mutton, and poultry meat increased by 2.5%. Industrial production has recovered steadily. In the first quarter, the value added of industrial enterprises above designated size increased by 3% year on year, 0.3 percentage points higher than that in the fourth quarter of last year. The service sector has witnessed a marked rebound in growth rate. In the first quarter, the value added of the service sector grew 5.4% year on year, 3.1 percentage points higher than that in the fourth quarter of last year. The service sector, with face-to-face engagements among a significant number of people, previously hit hard by COVID-19, has especially recovered very fast.

Second, domestic demand has been expanding. Market sales have turned to increase. More opportunities and greater expectations to spend have driven market sales to expand and consumer spending in the service sector to rebound notably. In the first quarter, the total retail sales of consumer goods rose 5.8% from a year earlier, compared with a 2.7% decrease in the fourth quarter of last year. Retail sales in the service sector have demonstrated a good recovery momentum, of which catering revenue rose 13.9%. Investment has grown steadily. In the first quarter, fixed asset investment increased by 5.1% year on year, on par with the whole of last year. Among them, infrastructure investment and manufacturing investment grew by 8.8% and 7%, respectively.

Third, jobs and prices have remained basically stable. The employment situation has improved. In the first quarter, the surveyed urban unemployment rate averaged 5.5%, down 0.1 percentage points from the fourth quarter of last year. The surveyed urban unemployment rate in March was 5.3%, down 0.3 percentage points from February. Consumer prices rose moderately, and the supply of goods and services in the market was on the whole sufficient. In the first quarter, consumer prices rose by 1.3% year on year, maintaining a moderate rise. Excluding food and energy, the core CPI rose 0.8% year on year, unchanged from that of the first two months and thus basically stable.

Fourth, solid progress has been made in high-level opening up. We have vigorously stabilized and improved foreign trade, and actively expanded trade with emerging markets and developing countries, including those along the Belt and Road. China's foreign trade has continued to show its resilience. In the first quarter, China's trade volume of goods increased by 4.8% year on year, and the trade volume of goods with countries along the Belt and Road increased by 16.8% year on year, a rapid growth. China's foreign trade has shown its resilience in a complex and grim external environment. In the first two months, China's actual use of foreign capital increased by 6.1%, among which, that of high-tech industries increased by 32%.

Fifth, transformation and upgrading have continued, and new drivers of growth have continued to grow. In the first quarter, investment in high-tech industries grew by 16% year on year, significantly outpacing overall investment growth. In the first quarter, online retail sales of physical goods increased by 7.3% year on year, accounting for 24.2% of the total retail sales of consumer goods. Green and low-carbon products have grown rapidly. In the first quarter, the output of new-energy vehicles and solar cells increased by 22.5% and 53.2%, respectively. Consumer spending has shown a significant leading role. In the first quarter, the contribution of final consumption expenditure to economic growth reached 66.6%, higher than that of gross capital formation.

Sixth, market vitality has been growing, and expectations of business entities have improved. In March, manufacturing PMI was 51.9%, staying above 50% for three months consecutively. The non-manufacturing business activity index was 58.2%, up 1.9 percentage points from the previous month and reaching a relatively high level in recent years, and the business activity index of the service sector rose to 56.9%. People flow and logistics have gained steam. In the first quarter, cargo volume increased by 5% year on year, and passenger volume increased by 26.3%. Railway passenger volume and civil aviation passenger volume increased by 67.7% and 68.9%, respectively. The operation performance of small and micro businesses has improved. In the first quarter, the value added of small and micro enterprises above the designated size increased by 3.1%, faster than the growth of all industrial enterprises above the designated size, and the index gauging the prosperity of small and micro enterprises picked up from the fourth quarter of last year.

It is not easy to make such progress in a complex and grim international environment, and it is important to see that the external environment is complex, the global economy is markedly slowing, there are a lot of factors of instability and uncertainty, and despite the recovery and rebound, the domestic economy still faces an obvious lack of demand and prominent structural issues, which requires us to further consolidate the foundation for a rebound. Going forward, we will fully implement the guiding principles of the Central Economic Work Conference and the plans in the Government Work Report, adhere to the general principle of seeking progress while ensuring stability, implement macro policies in a systemic and targeted way, unleash the potential of domestic demand, deepen reform, opening up, and innovation, push for a sustained overall economic recovery, and strive for improvements in quality and growth in quantity.

Thank you.

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Market News International(MNI):

China's exports were strong in March, better than expected. Do you think this strong momentum is sustainable?

Fu Linghui:

Thank you for your question. Since this year, China's imports and exports have maintained sustained growth, following last year's good performance. It was not easy. In the first quarter, the total import and export of goods grew 4.8% year on year, of which exports grew 8.4%, maintaining a relatively fast growth. It was not easy to achieve such growth in the context of slowing world economic growth and greater external uncertainties. In the next stage, China's import and export growth is facing certain pressure, mainly in the following ways: First, the world economy is growing weakly. According to the IMF forecast, the global economy is expected to grow by 2.8% in 2023, a significant drop from last year's growth rate. According to the latest WTO forecast, the volume of global merchandise trade will grow by 1.7% in 2023, which is significantly lower than last year. Second, external uncertainty is relatively large. Inflation levels in the U.S. and Europe have been relatively high so far this year, and monetary policies have continued to tighten. Recently, some bank liquidity crises in the United States and Europe have been exposed, which has increased the instability in economic operations. At the same time, geopolitical risks still exist. Rising unilateralism and protectionism have also exacerbated instability and uncertainty in global trade and economy.

Despite these pressure and challenges, China's foreign trade is resilient and dynamic. With various policies stabilizing foreign trade, the year is expected to achieve its goal of promoting stability and improving quality. First, China's industrial system is relatively complete, the supply chain is relatively strong, and it can adapt to changes in the foreign demands. Second, China insists on expanding opening up to the outside world and constantly expanding foreign trade. In the first quarter, China's imports and exports with countries along the Belt and Road grew by 16.8%, and imports and exports with other RCEP member countries grew by 7.3%, of which exports grew by 20.2%. Third, China's foreign trade has increasingly been driven by new growth momentums. Recently, the General Administration of Customs press conference also mentioned the first quarter growth of 66.9% in exports of electric passenger cars, lithium batteries, and solar cells. Cross-border e-commerce and other new business forms in foreign trade also grew relatively fast. Going forward, the policies designed for stabilizing foreign trade will continue to show results, which is conducive to achieving the goal of promoting stability and improving the quality of foreign trade throughout the year. Thank you.

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Reuters:

Production data were satisfactory back in March, and production has now returned to pre-epidemic levels. However, consumption remains sluggish, leading to an uneven economic recovery. Will new policies be introduced to balance this situation? What will it take to convince Chinese consumers to spend more instead of putting more money in the bank?

Fu Linghui:

Thank you for your questions. From the situation in the first quarter, consumption growth has rebounded significantly. Since this year, with epidemic prevention and control making a quick and smooth transition to a new stage, pro-consumption policies have continued to pay dividends, and sales have rebounded significantly. In particular, the improvement in service consumption is more obvious. Consumption played a greater role in driving economic growth. As we have talked about, the contribution of the final consumption to economic growth in the first quarter reached 66.6%, a significant rebound over the whole of last year. Among the three major demands, consumption demand has become the most significant factor for driving economic growth. From the perspective of sales, total retail sales of consumer goods in the first quarter rose 5.8% year on year, compared with a 2.7% decline in the fourth quarter of last year, which indicates that consumption is gradually rebounding and improving.

From the main features, first, the service consumption rebounded significantly. As the impact of the epidemic gradually receded, consumption scenarios increased, and offline consumption grew quickly with residents going out for dining, entertainment and travel. In the first quarter, the catering sector saw the revenue increasing by 13.9% year on year. In the same period, the year-on-year nominal growth of national per capita consumption expenditure on services were 6.2%, significantly higher than that of national per capita consumption expenditure in total, and the national consumption expenditure on services' proportion in the national consumption expenditure in total was 0.3 percentage points higher year on year. 

Second, the growth of merchandise sales showed a positive trend. With the gradual release of consumer demand, the accelerated growth of upgraded consumption, and the continued growth of consumption required by basic living, a steady rebound has been seen in commodity sales. In the first quarter, retail sales grew by 4.9% year on year, compared with a 1.7% decline in the fourth quarter of last year. Among businesses above designated size, nearly 70% of the 18 categories of goods saw year-on-year growth in the value of retail sales. The retail sales of grain, oil, and foodstuff, and garments, footwear, hats, and knitwear, namely goods for basic living, increased by 7.5% and 9% year on year, respectively. Retail sales of gold, silver and jewelry, and cosmetics, namely nonessentials, increased by 13.6% and 5.9%, respectively.

Third, the growth of online and offline consumption accelerated. With the improvement in circulation, online consumption continues to develop in a good direction. In the first quarter, the online retail sales of physical goods grew by 7.3% year on year, continuing to maintain rapid growth. At the same time, with the recovery of offline consumption, the retail sales of physical stores gradually improved. In the first quarter, retail sales in physical stores above designated size increased by 3.6% year on year, with the growth rate 3.2 percentage points higher than in January and February.

Fourth, the propensity of residents to consume has rebounded. As the economy stabilized and rebounded, the employment situation gradually improved, the consumption scenarios continued to increase, and residents' confidence in consumption improved, which led to a rise in the average propensity to consume. In the first quarter, the national average propensity to consume was 62%, an increase of 0.2 percentage points over the same period last year.

In general, overall consumption has restored the good momentum. But we note that consumer spending needs to be further encouraged. Going forward, we must use every possible means to increase people's incomes, and work actively to increase supply quality to effectively combine expanding consumption with supply-side structural reform, which will unleash consumption potential, promote economic development and improve people's wellbeing. Thank you.

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Nikkei: 

My question is about the CPI. China's core CPI rose 0.7% in March from a year earlier. Despite the Chinese economy having started to recover after adjusting the COVID-19 response, the year-on-year increase in the core CPI is still low. How does the NBS view the main reasons for the stagnant core CPI? Is China's economy at risk of deflation? Thank you.

Fu Linghui: 

Prices are an important concern among the public. There has been a lot of discussion recently about whether China's economy is heading for deflation. Generally speaking, the Chinese economy has not experienced deflation at present, and there will be no deflation in the next stage. Deflation is internationally defined as a sustained decline in the general level of prices, often accompanied by a reduction in the money supply and economic recession. However, judging from the economic performance in the first quarter in China, consumer prices increased 1.3% year on year, maintaining a moderate rise. In terms of money supply, the M2 money supply soared 12.7% at the end of March, maintaining a relatively high rate of growth. In terms of economic growth, China's economy grew by 4.5% in the first quarter, up from the fourth quarter of last year. There is no deflation on the whole.

We have also seen falling CPI growth in the first quarter of this year. What's the reason for the drop? It is mainly affected by some time-related factors.

First, it is due to seasonal factors. Following the Chinese Lunar New Year, which fell in January this year, prices generally drop as demand declines.

Second, some food prices have fallen. As it gets warmer, supplies of fresh vegetables have increased substantially, with prices dropping both month on month and year on year. Thanks to this year's adequate hog supplies and reduced post-holiday consumer demand, pork prices have fallen. All these have led to a decline in the CPI. 

Third, energy prices have decreased. For China's CPI, energy prices have fluctuated with the international market. Since the beginning of this year, the global economy has slowed, and prices on the international energy market, especially the crude oil market, have dropped on the whole, leading to lower domestic energy prices. In March, gasoline and diesel prices fell 6.6% and 7.3% respectively from a year earlier.

Fourth, prices of cars, especially fuel-powered cars, have dropped. Due to the expiration of automobile subsidy policies and an adjustment to emission standards, automakers have recently increased discounts. In March, fuel-powered car prices fell 4.5% from a year earlier. All these factors have affected the change in prices.

Fifth, due to the impact of geopolitics and the COVID-19 pandemic, the price base was relatively high in the same period of last year. These factors have led to a decline in the growth of CPI prices year on year.

Although CPI prices have fallen, supply and demand remained basically stable. Excluding food and energy, the core CPI rose by 0.8% year on year in the first quarter, flat from January to February, and rising 0.2 percentage points from the fourth quarter of last year. In terms of service prices, the first quarter saw a year-on-year increase of 0.8%, up by 0.3 percentage points over the fourth quarter of last year. In terms of broader price levels, the CPI mainly measures price changes in the consumer sector. If we look at price changes in the economy, we should also consider GDP deflators, which posted slight growth in the first quarter of this year, picking up from the fourth quarter of last year. If all these are taken into consideration, there is no deflation. 

Going forward, prices will recover steadily, and prices' driving role will gradually strengthen. The so-called deflation will not appear. In terms of price performance, due to the high price base of last year, and the high rise in international commodity prices, as well as tight domestic supply affected by the COVID-19 pandemic, the CPI increase was relatively high in the second quarter of last year. As a result, the CPI increase in the second quarter of this year may remain low, but this does not mean there is deflation. As the influencing factors will gradually disappear in the second half of the year, prices will return to a reasonable level.

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Yicai:

What's your opinion on the investment data in the first quarter? Private investment has been low for some time, registering growth of only 0.6% in the first quarter. What are the reasons for this?

Fu Linghui:

The issue of investment has raised much attention. On the whole, China is still the largest developing country in the world. There is still a big gap between our per capita capital stock and that of developed countries. More investment is needed to address unbalanced and inadequate development, break through bottlenecks in science and technology, accelerate innovation-driven development, and promote high-quality development.

Since the beginning of this year, China has continued to expand domestic demand and give full play to the key role of investment in improving the supply structure. We have increased investment in key fields and at key links, and are actively working to expand investment in areas that are important to people's wellbeing so as to ensure and improve their lives. Steady investment growth has played a positive role in driving economic growth. In the first quarter, fixed asset investment rose by 5.1% year on year, strengthening the basis for sustained growth. Investment in China has the following characteristics:

First, manufacturing investment has experienced rapid growth. The size of China's manufacturing industry has ranked first in the world for many years and is the cornerstone of our industrial development, boasting strong competitive advantages. However, there are still many shortcomings in certain key areas. China's manufacturing industry has huge potential to transform and upgrade amid a new wave of scientific and technological revolution and industrial transformation. China places great importance on the manufacturing industry's development and actively supports manufacturing innovation. Since the beginning of this year, manufacturing investment has sustained a rapid growth rate, with a year-on-year increase of 7% in the first quarter, significantly faster than total investment growth. Specifically, investment in high-tech manufacturing grew by 15.2%.

Second, infrastructure investment has grown rapidly. While China has made remarkable progress in infrastructure construction, we still need to speed up efforts to address the disparities in infrastructure between rural and urban areas. We must strengthen our weaknesses in the areas of transportation, water conservation and energy. With the expansion of digital, intelligent and green development, there is a growing demand for new infrastructure, such as 5G networks, charging facilities and big data centers. This year, we actively advanced infrastructure construction and achieved positive results. In the first quarter of this year, China's infrastructure investment grew by 8.8% year on year, bolstering the momentum for sustainable development in the future.

Third, investment in people's livelihoods has increased. China attaches great importance to ensuring and improving people's livelihoods. In recent years, we have consistently increased spending on improving people's living standards to promote people's well-being. This year, investment in the social sectors maintained rapid growth, with a year-on-year increase of 8.3% in the first quarter. Notably, health investment grew by 21.6%, which will help protect people's health.

Generally, this year, China's investment has sustained steady growth, and its structure has continued to be optimized, benefiting both economic growth and long-term development. However, we should note that the steady growth of investment still faces some constraints. In the next phase, we will focus on improving the quality of investment and promoting high-quality economic development, considering both the present and long-term benefits.

Regarding the issue of private investment, there are many influencing factors, and one of the major aspects is the adjustment of the real estate market. Private investment in real estate development declined by 13.8% in the first quarter, dragging down the rate of increase in private investment by 5 percentage points. Of course, private investment also faces other constraints, such as the downward slide in corporate performance and unstable market expectations. Overall, actively improving the market environment and increasing support for private enterprises will help stabilize private investment. Thank you.

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ITAR-TASS: 

We understand that the contribution of China's consumption to GDP growth declined during the pandemic. What's the situation like now? What are the predictions from NBS? Thank you

Fu Linghui:

Thank you for your question. This year, the contribution of consumption to economic growth has rebounded markedly. In the first quarter, the contribution of final consumption to GDP growth reached 66.6%, a significant rebound over the whole of last year. Going forward, consumption is expected to continue to play a leading role in driving economic growth. First, gradual economic recovery has improved employment, and the surveyed urban unemployment rate dropped significantly in March. This will in turn help increase personal incomes and boost capacity for consumption. Meanwhile, as the impact of the epidemic recedes and consumption scenarios expands, consumption will continue to increase. From the perspective of medium- and long-term development, China's per capita GDP reached $10,000 and consumer needs are rapidly increasing, and the long-term consumption outlook is promising. Taking these factors into consideration, consumption will play a stronger role in driving economic growth. Thank you.

Kyodo News:

What is the economic outlook for the second quarter? Will the economic data improve in the second quarter of this year? What are the major risks?

Fu Linghui:

People are most concerned about the situation in the next stage. So far this year, the Chinese economy has shown encouraging recovery momentum. The main indicators have stabilized and picked up, the vitality of business entities has increased, and market expectations have improved notably, laying a solid foundation for achieving the country's annual growth target. In the next stage, we expect the internal forces powering economic growth to strengthen gradually. We also expect macro policies to exert an obvious effect and overall economic performance to improve. Considering that the second quarter of last year was affected by the epidemic and forms a low base for comparison, economic growth in the second quarter this year is likely to be significantly faster than in the first quarter. However, due to higher comparison bases, growth might be slower in the third and fourth quarters than in the second quarter. Without considering the base effect, economic growth throughout the year will likely trend upward. The main underpinning factors are as follows:

First, the role of consumption in driving economic growth is gradually increasing, and the trend of consumption rebounding has been evident since the beginning of this year, enhancing its driving contribution to economic growth. As mentioned earlier, the contribution rate of final consumption to economic growth has increased compared to last year. With the improvement of the employment situation, the effectiveness of policies aimed at boosting consumption, and the increase in consumption scenarios, residents' consumption capacity and willingness to spend are expected to increase. At the same time, policies to actively increase spending on big-ticket items such as new energy vehicles and green and smart home appliances, to promote the integration of online and offline consumption, to develop new forms and models of consumption, and to accelerate the quality improvement and expansion of rural markets, are all conducive to the sustained growth of consumption, which in turn drives economic growth.

Second, stable growth in investment is expected to continue. Since the beginning of this year, all localities have actively advanced the construction of major projects, resulting in overall steady growth in investment. Fixed-asset investment grew by 5.1% in the first quarter. Going forward, traditional industries will continue to undergo transformation and upgrading, emerging industries will continue innovation and development, and support for the real economy is increasing, all of which are favorable for investment growth. In the first quarter, investment in manufacturing grew by 7%, outpacing overall investment growth. In the coming stage, in line with major national strategies and the 14th Five-Year Plan, we will focus our efforts on promoting infrastructure investment, aiding the further expansion of investment. In the first quarter, infrastructure investment grew by 8.8%, faster than overall investment growth. Moreover, as people's demand for buying homes or improving their housing situation increases, we have seen positive changes in real estate sales. Consequently, investment in real estate development is expected to gradually stabilize.

Third, the driving force of industrial transformation and upgrading has been enhanced. China has been fully implementing an innovation-driven development strategy, boosting its strategic scientific and technological strength, and promoting industrial upgrading and development. Technologies such as 5G networks, information technology, and artificial intelligence have developed rapidly, and new industries continue to emerge. In the first quarter, the added value of the equipment manufacturing industry increased by 4.3%, and the industrial technology intensity steadily increased. At the same time, the green and low-carbon transformation of the energy mix is accelerating, demands for new products are expanding, and more traditional industries are carrying out energy-saving and consumption-reducing transformation, all of which also enhance the driving effect. In the first quarter, the production of new energy vehicles and solar cell products maintained rapid growth. The industries' high-end, intelligent, and green development will inject new impetus into China's economic development.

Fourth, macro policies have continued to demonstrate their effectiveness. Since the beginning of this year, all localities and departments have fully implemented the guiding principles of the Central Economic Work Conference and the arrangements of the government work report. They have pursued a proactive fiscal policy with greater intensity and enhanced its performance while ensuring prudent monetary policies are precise and effective. They have focused on efforts to stabilize economic growth, employment, and prices. The policy effects have continued to emerge, and the economy's operation stabilized and rebounded in the first quarter.

In the next stage, as various decisions and arrangements made by the CPC Central Committee and the State Council are further implemented in detail, policy effects will become more evident. China's economic development momentum will continue to grow, promoting the recovery and improvement of economic operations.

Thank you.

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ThePaper.cn:

Currently, China's PPI has experienced six consecutive months of negative year-on-year growth. How does the NBS view this trend of PPI? Thank you.

Fu Linghui:

There is much concern over PPI. While CPI's year-on-year increase has slowed this year, PPI's decrease has expanded. In the first quarter, PPI fell by 1.6% year on year, with a 2.3% decrease in production material prices being the main factor for the decline. The expansion of the year-on-year decline in PPI is due to two main factors. Firstly, it is influenced by imported factors from the international environment. Since the beginning of this year, the growth of the global economy has slowed down, market demand has weakened, supply bottlenecks have eased, and the prices of bulk commodities have fallen, leading to a decrease in the prices of related products in domestic industries such as petroleum and nonferrous metals. In the first quarter, prices in the nonferrous metal industry fell by 5.9% year on year, while prices in the petroleum and natural gas extraction industry fell by 5.3%. Secondly, the high base figure from the same period last year is also a factor. The international bulk commodity prices rose sharply last year, affected by geopolitical conflicts and the COVID-19 pandemic, and the domestic supply was tight due to the pandemic, which led to a year-on-year increase of 8.7% in PPI in the first quarter of last year. The relatively high base figure also affects PPI trends this year.

From the perspective of month-on-month changes, PPI has been relatively stable this year. In January, PPI fell by 0.4% compared to the previous month, while in February and March, it remained stable. The main factors are, on the one hand, the recovery of domestic market demand, which has led to a month-on-month increase in the prices of investment goods such as steel and cement. In March, the prices of steel and cement both increased by 1.3% compared to the previous month. On the other hand, prices in the petroleum extraction and nonferrous metal industries decreased by 0.9% and 0.3% month on month, respectively, under the influence of imported factors from the international market. Meanwhile, due to seasonal factors, the demand for coal has decreased, and the prices in coal mining and washing industries fell by 1.2% month on month. Under the combined influence of these factors, PPI has remained stable month on month.

Going forward, overall domestic demand is starting to rebound, which has a certain upward effect on PPI. However, the transmission of international commodity prices still exists and coupled with the high base figure from the same period last year, PPI may remain in a downward range in the short term. Nevertheless, as the domestic economy recovers and the base effect gradually diminishes, PPI will gradually return to a reasonable level. Thank you.

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Voice of China, China Media Group:

Since the beginning of this year, the service industry has rebounded at a faster pace. What are the primary reasons for that? How do you interpret such a rebounding momentum? What's your prediction for the service industry's growth prospects in the next phase? Thank you.

Fu Linghui:

Since the beginning of this year, the rebound of the service sector has been a highlight of economic performance. As a crucial component of the national economy, the service sector accounts for more than half of the Chinese economy. In recent years, the growth of the service sector has slowed due to COVID-19 and other factors, having an adverse impact on economic growth and employment. As the effect of the pandemic has gradually ceased since the beginning of this year, policies to stabilize growth have taken effect at a faster pace. Meanwhile, production and life have returned to normal. The demand for services, especially contact-and-gathering-based services, has been unlocked more rapidly, and the growth of the service sector has markedly rebounded, providing strong support for economic growth and creating more jobs.

In the first quarter, the value-added output of the service sector rose by 5.4% year on year, up 3.1 percentage points from the last quarter. The service sector's contribution to economic growth reached 69.5%, becoming a key factor in supporting economic growth. In terms of structure, first, contact-and-gathering-based services rebounded rapidly. The notable increase in people's consumption of catering, shopping, tourism, and accommodation has led to growth in the relevant service sectors. In the first quarter, the value-added output of the wholesale and retail sector increased by 5.5% year on year, 5.2 percentage points higher than in the last quarter. Additionally, the value-added output of the accommodation and catering sector was up 13.6%, while the value-added output in the fourth quarter of last year was down 5.8%.

Second, the transportation sector has recovered rapidly. As production and life have returned to normal, the flow of goods and people has increased significantly. The growth in travel and transportation-related sectors has sped up. In the first quarter, the value-added output of the transportation, storage and postal service sector increased by 4.8% year on year, while in the fourth quarter of last year, it had decreased by 3.9%.

Third, the modern service sector has demonstrated sound growth momentum. With the rapid development of the digital economy in China, the demand for information technology has been expanding, which has driven rapid growth in relevant sectors of information services. In the first quarter, the value-added output of the information transmission, software and information technology service sector grew by 11.2% year on year, notably higher than the growth rate of the entire service sector. At the same time, the financial sector has kept strengthening its efforts to serve the real economy and actively satisfied the reasonable financing needs of enterprises, which has resulted in growth of value-added output in the financial sector. In the first quarter, the value-added output of the financial sector increased by 6.9% year on year.

With the rapid rebound in the service sector, enterprises' expectations in the service sector have improved markedly. Since the beginning of this year, the business activity index for services has stayed within the expansion range for three consecutive months, with the index in March standing at 56.9%, 1.3 percentage points higher than that in February, suggesting a favorable expansion trend in the service sector. The service sector has a large capacity for employment, and the recovery in the service sector will positively affect stabilizing and expanding employment.

However, we should also notice that the rebound in the service sector is still primary and in the recovery process. The foundation is not yet solid. In the next phase, we will work on expanding domestic demand, boosting personal incomes, improving the environment for consumers, and increasing the supply of quality services to promote the healthy development of the service sector. Thank you.

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Shou Xiaoli:

Due to time constraints, one last question, please.

The Beijing News:

Two figures in this year's employment season have received wide attention. The number of college graduates nationwide in 2023 is expected to reach 11.58 million. Additionally, the number of doctoral graduates and master's graduates will surpass the number of university graduates for the first time this year in Beijing. Based on the statistics from the first quarter of 2023, what's your opinion on the prospects for this year's job market?

Fu Linghui:

Employment is the cornerstone of well-being and is of great concern to people. According to this year's statistics, overall employment has improved. Based on our monitoring, workforce participation in the job market has risen steadily since the beginning of this year. The unemployment rate in March decreased markedly. Total employment increased from the same period last year, with year-on-year and month-on-month increases. With the economy's recovery, the level of activity in the job market has increased gradually. Regarding the unemployment rate, the surveyed urban unemployment rate nationwide in March was 5.3%, down a 0.3 percentage points from the previous month. The main features are as follows:

First, the unemployment rate in most of the labor market has dropped markedly. As the economy rebounds, enterprises need more labor, and the number of market entities in active operation has been growing, contributing to the improvement in employment. In March, the unemployment rate among those aged between 25 and 59 was 4.3% and fell by half a percentage point from the previous month, lower than the same period in 2019.

Second, the employment of rural migrant workers has improved at a faster pace. Since the beginning of this year, the number of rural migrant workers nationwide has continued to increase. Under the joint influence of economic recovery and pro-employment policies, the employment rate of migrant workers has improved notably. In March, the unemployment rate of rural migrant workers stood at 5.3%, down a 0.7 percentage points from the previous month. The construction, wholesale, and retail sectors, where many rural migrant workers are employed, have recovered well, playing a significant role in driving the employment of rural migrant workers.

Third, the unemployment rate in large cities has dropped steadily. Affected by the epidemic last year, the unemployment rate in 31 large cities stayed at a relatively high level. Since the beginning of this year, the unemployment rate in 31 large cities has decreased as the economy has improved. In March, the surveyed unemployment rate in 31 large cities dropped to 5.5%.

However, we should also acknowledge that the youth unemployment rate has increased. In March, the unemployment rate of young people aged 16 to 24 was 19.6%, up 1.5 percentage points from the previous month. Structural employment problems are prominent. The youth unemployment rate is rising because this year's fresh college graduates have started entering the labor market to seek employment. 

In the next stage, although the youth unemployment rate is rising, it is expected to gradually improve as the economy recovers and the demand for labor expands. This year, among those aged 25 to 59, the majority of the labor market, the unemployment rate is lowest for those who have received higher education. That implies that as college graduates enter the labor market, the youth unemployment rate will gradually decrease, and the overall situation will improve. Generally speaking, the positive momentum of employment is expected to continue. Of course, we should also pay attention to certain structural problems, such as the youth unemployment rate, and efforts should be made to strengthen support for the employment of young people, especially college graduates. This will promote the sustained improvement of employment. We should also move faster to upgrade industries to provide more high-quality jobs.

Thank you.

Shou Xiaoli:

Thanks to Mr. Fu Linghui and friends from the media. Today's briefing is now concluded. Goodbye.

Translated and edited by Wang Yiming, Wang Qian, Cui Can, Wang Wei, Zhang Jiaqi, Zhou Jing, Liu Caiyi, Liu Sitong, Duan Yaying, Dong Qingpei, Yuan Fang, Zhang Rui, Huang Shan, Xu Kailin, Wang Yanfang, Li Huiru, David Ball, Tom Arnsten, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.