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SCIO briefing on China's economy in Q1

Economy
The Chinese economy saw a solid start to the year with a 6.8-percent growth in the first quarter, according to official data released Tuesday.

China.org.cnUpdated: April 18, 2018

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Speakers:

Xing Zhihong, director general of Department of Comprehensive Statistics and spokesman of the National Bureau of Statistics

Chairperson:

Xi Yanchun, spokeswoman of the State Council Information Office

Date:

April 17, 2018

Xing Zhihong (R), spokesperson of the National Bureau of Statistics, speaks at a press conference held by the State Council Information Office of China in Beijing, April 17, 2018. [Photo by Yuan Shaoda/China SCIO]


Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we invited Mr. Xing Zhihong, director general of the Department of Comprehensive Statistics and spokesman of the National Bureau of Statistics, to introduce China's economic performance in the first quarter of 2018. He will also answer some of your questions.

Now, Mr. Xing will give you a brief introduction.

Xing Zhihong:

Good morning, friends from the press. Glad to meet you. As usual, I will report to you the national economic performance in the first quarter of this year and then take your questions.

The national economy saw a good start in the first quarter.

This year, under the leadership of the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core, all localities and departments strived for progress while working to keep performance stable, upheld China's new development philosophy, followed the requirements of promoting high-quality development, focused on establishing a modernized economic system, and implemented relevant policies with great effort. As a result, we maintained steady and sound economic development, promoted the transformation and upgrading of industries, improved quality and efficiency of development, and got off to a good start. 

According to preliminary estimation, the GDP in the first quarter reached 19.8783 trillion yuan, up by 6.8 percent year-on-year in comparable prices. From the perspective of industry, the added value of the primary, secondary and tertiary industries totaled 890.4 billion yuan, 7.7451 trillion yuan and 11.2428 trillion yuan respectively, up by 3.2 percent, 6.3 percent and 7.5 percent year-on-year. 

1. Agricultural production went well.

In the first quarter, the output of pork, beef, mutton and poultry was 23.16 million tons, up 1.8 percent year-on-year; the output of pork was 15.43 million tons, up 2.1 percent. The number of pigs bred was 415.23 million, down 1.2 percent year-on-year; the number of pigs slaughtered was 199.83 million, up 1.9 percent. In March, overall weather conditions in major farming areas were favorable, and sunlight and soil moisture in most of these regions were appropriate. Spring plowing and sowing have been going well. 

2. The overall industrial production was stable.

In the first quarter, the value added of industrial enterprises above the designated size actually increased by 6.8 percent year-over-year, and the growth rate fell by 0.4 percentage point compared with the growth from January to February, which was the same as the figure of the same period of last year. 

In terms of economic types, the value added of state holding enterprises increased by 7.9 percent, and the value added of collective enterprises increased by 0.1 percent, while that of share-holding enterprises rose by 7 percent and that of foreign-invested companies and Hong Kong-, Macao- and Taiwan-invested companies rose by 5.5 percent. 

Looking at the three categories, the value added of the mining industry increased by 0.9 percent year-over-year, that of the manufacturing industry increased by 7.0 percent, while electricity, heat, gas and water production and supply industries increased by 10.8 percent. New products from the new industries have developed rapidly. The value added of high-tech and equipment manufacturing increased by 11.9 percent and 8.8 percent respectively year-over-year, which was faster than that of the industries above the designated size by 5.1 and 2 percentage points, respectively. Integrated circuit production output increased by 15.2 percent year-over-year, new energy vehicles increased by 139.4 percent, and industrial robots increased by 29.6 percent. The output sales ratio of industrial enterprises above the designated size reached 97.9 percent, which was 0.3 percentage point higher than the same period of last year. 

In March, the value added of industries above the designated size increased by 6 percent from the previous year, and increased by 0.33 percent compared with the previous month. In March, the manufacturing industry's purchasing managers' index (PMI) was 51.5 percent, up 1.2 percentage points from the last month.

From January to February, national industrial enterprises above the designated size achieved a total profit of 968.9 billion yuan, a year-over-year increase of 16.1 percent. The profit margin for primary business income of industrial enterprises above the designated size was 6.1 percent, an increase of 0.33 percentage point over the same period of the previous year.

3. Services sector grew at a relatively fast pace. 

In the first quarter, the index of services production increased by 8.1 percent year-on-year, 0.1 percentage point higher than the first two months of this year and 0.2 percentage point lower than the same period last year. 

Information transmission, software and information technology services, and leasing and business services delivered a strong performance. In March, the index of services production grew by 8.3 percent year-on-year, 0.3 percentage point higher than that of the first two months, the same rate as the same period in 2017. In the first two months, the operating revenues of service sector enterprises above the designated size increased by 14.1 percent year-on-year, 0.7 percentage points higher than the same period last year. 

In March, the business activity index for services stood at 53.6 percent, 0.2 percentage points lower than the previous month but still higher than last year's average. The business activity index for sectors such as rail transport, air transport, postal and express delivery services, telecommunications, radio and television broadcasts and satellite transmission, Internet and software information technology services, monetary and financial services, capital market services and insurance stayed within the relatively prosperous range of over 55.0 percent. 

As for market expectations, the business activity expectation index for the service sector stood at 60.1 percent, higher than the 60.0percent for the last ten consecutive months.

4. Private investment increased at a faster rate.

In the first quarter, the national fixed-asset investment (excluding rural households) was 10.0763 trillion yuan, increasing 7.5 percent year-over-year, 0.4 percentage point lower than the growth rate of the first two months of the year, and 1.7 percentage points lower than the same period of last year. In particular, private investments reached 6.2386 trillion yuan, increasing 8.9 percent year-over-year, 0.8 percentage point higher than the growth rate of the first two months, and 1.2 percentage points higher than the same period of last year. 

Specifically, investments in primary industry totaled 290 billion yuan, increasing 24.2 percent. Investments in secondary industry totaled 3.5813 trillion yuan, increasing 2.0 percent. Of those, investments in the manufacturing industry increased 3.8 percent. Investments in tertiary industry totaled 6.2050 trillion yuan, increasing 10.0 percent. Of those, investment in infrastructure increased 13.0 percent. One thing to note is that investments in the high-tech manufacturing industry increased 7.9 percent yearly, 0.4 percentage point higher than the overall investment growth rate. On a monthly basis, the fixed-asset investment (excluding rural households) in March increased 0.57 percent.

5. The floor space of commercial buildings for sale continued to decrease.

In the first quarter of this year, total investment in real estate development was 2.1291 trillion yuan, a 10.4-percent growth year-on-year. The growth rate was 0.5 percentage point higher than that in January and February, exceeding that of last year's same period by 1.3 percentage points. In particular, the investment in residential buildings increased by 13.3 percent. 

The total floor space of houses newly started in the first three months was 346.15 million square meters, up by 9.7 percent year-on-year. The floor space of residential buildings newly started went up by 12.2 percent. The floor space of commercial buildings sold was 300.88 million square meters, up 3.6 percent, of which the floor space of residential buildings sold grew by 2.5 percent. The total sales of commercial buildings were 2.5597 trillion yuan, up 10.4 percent. Specifically, the sales of residential buildings rose 11.4 percent. 

The land space purchased by real estate development enterprises was 38.02 million square meters, up 0.5 percent year-on-year. By the end of March, the total floor space of commercial buildings for sale was 573.29 million square meters, 11.38 million square meters less than at the end of February. The fund in place for real estate development enterprises in the first quarter reached 3.6770 trillion yuan, up by 3.1 percent year-on-year.

6. Market sales remain active.

In the first quarter, the total retail sales of consumer goods reached 9.0275 trillion yuan, an increase of 9.8 percent year on year. The growth rate was 0.1 percentage points higher than that from January to February, and 0.2 percentage points lower than the same period of last year. Analyzed by locations for business units, the retail sales of consumer goods in urban areas reached 7.7096 trillion yuan, up by 9.7 percent, while that of consumer goods in rural areas rose 10.7 percent to 1.3179 trillion yuan. 

Grouped by consumption patterns, the revenues from the catering sector were 971.1 billion yuan, up by 10.3 percent, while commodity retail revenues were 8.0564 trillion yuan, up by 9.8 percent. The sales of goods for consumption upgrade grew faster, and cosmetics above the limitation unit, with household appliances and audio-visual equipment witnessing a year-on-year growth of 16.1 percent and 11.4 percent respectively, 6.2 and 3.4 percentage points faster than the same period of last year respectively. In march, the total retail sales of consumer goods increased 10.1 percent on a year-on-year basis, 0.4 percentage point faster than that from January to February, and up by 0.73 percent from the previous month.

In the first quarter, online retail sales rose 35.4 percent from a year earlier to 1.9318 trillion yuan, an increase of 3.3 percentage points over the same period last year. Among them, online retail sales of physical goods reached 1.4567 trillion yuan, up by 34.4 percent, accounting for 16.1 percent of the total retail sales of consumer goods, and an increase of 3.7 percentage points over the previous year. Online retail sales of non-physical goods reached 475.1 billion yuan, an increase of 38.7 percent.

7. The foreign trade surplus shrank greatly.

In the first quarter, imports and exports reached 6.7516 trillion yuan, up 9.4 percent. China's exports increased 7.4 percent to 3.5389 trillion yuan while imports increased 11.7 percent to 3.2127 trillion yuan. The foreign trade surplus shrank 21.8 percent year-on-year to 326.2 billion yuan. The trade structure has been further improved. The general trade of imports and exports increased by 13.2 percent, accounting for 58.3 percent of the total imports and exports, up 2 percentage points from the previous year. About 59.4 percent of the exports were mechanical and electrical products, with an increase of 9.5 percent. The exports and imports to the three largest trading partners of China have maintained a high growth rate, up 8.2 percent, 6.3 percent and 13.7 percent to the EU, the United States and the ASEAN respectively. In addition, China's exports and imports to some targeted countries involved in the Belt and Road Initiative maintained a sound momentum growth, with an increase of 20.5 percent, 16.6 percent and 16.2 percent to Russia, Poland and Kazakhstan respectively. The total volume of exports and imports reached 2.2453 trillion yuan in March, dropping 2.5 percent. Exports fell 9.8 percent to 1.1078 trillion yuan and imports up 5.9 percent to 1.1375 trillion yuan.

In the first quarter, the delivery value of exports of industrial enterprises above the designated size reached 2.7145 trillion yuan, increasing by 7.6 percent year on year, and it grew 4.0 percent to 1.0016 trillion yuan in March.

8. The Consumer Price Index (CPI) and the Producer Price Index (PPI) registered moderate growth.

In the first quarter of this year, China's CPI rose 2.1 percent year-on-year, 0.1 percent lower than the growth rate of the first two months and 0.7 percent higher than that of the same period last year. The figure comprised increases of 2.2 percent in urban areas and 2.0 percent in rural areas. In view of industrial categories, the price of food, cigarettes and alcohol increased by 1.9 percent year-on-year; wares by 1.2 percent; accommodations by 2.4 percent; daily necessities and services by 1.6 percent; traffic and telecommunication by 0.7 percent; education, culture and entertainment by 2.2 percent; medical and healthcare services by 6.0 percent and other services by 1.4 percent.

Amid the prices of food, cigarettes and alcohol, those of crops went up by 1.1 percent, pork went down 9.9 percent and fresh vegetables went up 6.6 percent. In March of this year, the CPI rose 2.1 percent year-on-year, 0.8 percentage points lower than the growth rate in February, and 1.1 percent lower than the growth generated the previous month.

In the first quarter of this year, the PPI rose by 3.7 percent year-on-year, 0.3 and 3.7 percentage points lower than the growth rate of the first two months of this year and the same period last year, respectively. In March, the PPI cost increased by 3.1 percent, 0.6 percentage points lower than the growth rate in February, and 0.2 percent lower than the growth generated the previous month. In the first three months this year, the purchasing price of PPI rose by 4.4 percent. In March alone, the figure went up by 3.7 percent year-on-year and was down 0.3 percent from one month ago.

9. The employment situation basically remains stable. 

The surveyed urban unemployment rate was 5.0 percent in January, 5.0 percent in February and 5.1 percent in March, 0.2 percentage points, 0.4 percentage points and 0.1 percentage points lower than the same period last year respectively. The surveyed urban unemployment rate in 31 big- and medium-sized cities was 4.9 percent in January, 4.8 percent in February and 4.9 percent in March, 0.1 percentage points, 0.2 percentage points and 0.1 percentage points lower than the same period last year respectively. 

By the end of the first quarter, the number of rural laborers, who work as migrant workers out of their hometowns, had reached 174.41 million, 1.88 million more than the same time last year, up 1.1 percent.  

10. Residents' income increases steadily.

In the first quarter, the national average per capita disposable income was 7, 815 yuan, which means a nominal growth of 8.8 percent year-on-year and an actual growth of 6.8 percent year-on-year after adjusting for inflation. Classified according to residents' permanent residence locations, over the first quarter, the urban residents' average per capita disposable income was 10,781 yuan, an actual growth of 5.7 percent after adjusting for inflation, and it was 4,226 yuan with a 6.8 percent growth rate for rural residents. The average per capita disposable income between urban and rural residents stood at 2.55:1. The income ratio was 2.57 the same period last year. The median of the national average per capita income is 6,580 yuan in the first quarter, nominally up 8.5 percent year-on-year.    

11. The effects of restructuring and upgrading are obvious.

Supply-side structural reform deepens. In the first quarter, the national industrial capacity utilization rate was 76.5 percent, 0.7 percentage points higher than the same period last year. Destocking has made concrete progress. By the end of March, the for-sale area of the commercial residential houses had dropped 16.7 percent year-on-year. The effects of the deleveraging efforts are apparent. By the end of February, the liability-asset ratio of industrial enterprises above designated size is 56.3 percent, down 0.8 percentage points year-on-year. The cost of the real economy continues to drop. The cost of per 100-yuan main business revenue of industrial enterprises above the designated size is 83.98 yuan in January and February, 0.33 yuan less than the same period last year. 

The investment in the deprived fields has increased fast. In the first quarter, the investment in ecological preservation and environmental treatment, public facilities and agriculture grew by 34.2 percent, 13.4 percent, 25.4 percent respectively year-on-year, 26.5, 5.9 and 17.9 percentage points faster respectively than the average growth of the total investment in all fields.    

The economic structure is continuously optimizing. In the first quarter, the contribution rate of the tertiary industry's added value to the growth of gross domestic product was 61.6 percent, 25.5 percentage points higher than that of the secondary industry. The contribution rate of the final consumption spending to economic growth was 77.8 percent, 46.5 percentage points higher than the contribution from gross capital formation. 

The new drivers of growth are developing fast. In the first quarter, the number of newly registered enterprises nationwide reached 1.323 million, up 5.4 percent year-on-year, which translates to 14,700 new enterprises per day on average. The added value of the emerging strategic industries increased 9.6 percent year-on-year, 2.8 percentage points faster than the average of the industrial enterprises above the designated size aforementioned. Green development advances. In the first quarter, the energy consumption per unit of gross domestic product dropped 3.2 percent year-on-year.

Generally speaking, the national economy continued its steady growth and structural optimizing in the first quarter. The favorable conditions supporting high quality growth increased, laying a good foundation for the healthy and steady development of the economy this year. But it is noteworthy that the uncertainties in the international environment increase, and the unbalanced and incomplete development at home remains outstanding, and the reform and development missions are still tough. 

In the next stage, we should follow the guidance of the Xi Jinping Thought of Socialism with Chinese Characteristics for the New Era, implement the spirit and requirements of the Communist Party of China's 19th National Congress and the Central Economic Work Conference, carry out the deployment of the Government Work Report, adhere to the principle to seek progress in stability, realize the new development concepts, deepen the supply-side structural reform, seek innovation-driven growth, further expand reform and opening-up, increase the internally generated driving forces for development, guide and stabilize people's expectations for future growth and push forward the sustainable and healthy development of the economy. 

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