CCTV:
The statistics you just released show China's economic performance in the first quarter was stable. How do you understand the situation? You just mentioned that China had made a good start. Can you explain?
Xing Zhihong:
Thank you for the question. In the first quarter, national economic performance remained stable while making further progress with new growth momentum emerging. We have made a good start, as the transformation and upgrading of industries went further, and the quality and effect of development continued to improve. Generally speaking, national economic performance in the first quarter was stable and sound, with new growth drivers emerging and economic structure improving.
First, the national economy ran steadily. Major macro-regulation indexes show that in the first quarter, China's economic performance remained stable. A steady rise was seen in the economy, more jobs were created, commodity prices remained basically unchanged, and a general balance was kept in international payments.
Regarding overall economic development, in the first quarter, the national economy grew 6.8 percent, at the same rate of the fourth quarter of last year. The rate has remained between 6.7 percent and 6.9 percent for 11 consecutive quarters.
Regarding the job market, the urban unemployment rate was around 5 percent in the first three months. In particular, the unemployment rate in 31 big cities remained below 5 percent. The total number of rural workers working outside their hometowns increased 1.88 million, up by 1.1 percent year-over-year. The sound employment situation is a major indicator of stable economic performance.
Regarding commodity prices, in the first quarter, the CPI increased slightly by 2.1 percent year-on-year. Commodities were in sufficient supply, basically able to meet the market demand. Moreover, the PPI growth rate slowed down. In the first quarter, the PPI increased 3.7 percent, with the growth rate down by 3.7 percentage points year-on-year.
Regarding international payments, so far this year, China's imports and exports continued to grow rapidly. In particular, the growth rate of imports continued to outpace exports, leading to a smaller trade surplus. Imports and exports were more balanced, and foreign exchange reserves were basically unchanged.
Second, the economy is driven by new growth drivers. It is mainly reflected by innovation-driven development. Mass entrepreneurship and innovation are booming and have stimulated market vitality and social creativity. New growth drivers continue to increase. Since the beginning of this year, new market players have increased substantially. Statistics by relevant authorities show that China's newly registered enterprises in the first quarter reached 1.32 million, with a daily increase of 14,700 on average. This substantial increment illustrates that mass entrepreneurship and innovation encourage passion for business. New industries, businesses and models are thriving. In the first quarter, the added value of the strategic emerging industries grew by 9.6 percent, registering an increase higher than the average growth rate of the industrial enterprises above designated size. Meanwhile, online retail sales rose 35.4 percent, and the volume of express delivery went up more than 30 percent. Their growth rate continues to accelerate. Now, the "Internet Plus" has reached different industries and sectors and bred many new forms of industries and business models. The digital economy, platform economy and sharing economy continue to grow rapidly, injecting new vitality into China's economic development.
Third, the economic structure has been optimized and coordinated development enhanced. In terms of industrial structure, the service industry continuously played a leading role as it accounted for 56.6 percent of the economy in the first quarter, 0.3 percentage points higher year-on-year. It contributed 61.6 percent to economic growth, 25.5 percentage points higher than that of the secondary industry. The industry continues to move toward mid and high-end manufacturing as the proportions of high-tech manufacturing and equipment manufacturing were improved to 12.7 percent and 32.2 percent respectively among industrial enterprises above designated size.
In terms of demand structure, the fundamental role of consumption has been enhanced. The final consumption expenditure contributed 77.8 percent to economic growth, 46.5 percentage points higher than that of the gross capital formation. Consumption of goods has been shifted to quality consumption; material consumption shifted to service consumption. This is the new change in terms of consumption.
In terms of investment, the investment also addressed inadequacies, shored up points of weakness and gathered momentum, thus achieving an optimized structure. This year, the investment in agricultural and social sectors both grew by over 20 percent. As for industrial investment, investments in high-tech industries have increased continuously.
The foreign trade structure has also been optimized. In terms of trade modes, the proportion of general trade was improving. In terms of trade subjects, the proportion of exports of private enterprises increased continuously. In terms of region, the imports and exports in central and western China grew remarkably faster than that of the nation as a whole.
Four, the economic performance is good. The efficiency of enterprises were improved, household income increased, and green development was boosted. Enterprise profits enjoyed rapid growth. From January to February, profits of industrial enterprises above designated size increased by 16.1 percent year-on-year, and profits of service companies above designated size rose by 4.5 percent. It is not easy for enterprises to maintain such a growth rate considering the high profits last year, which indicates their efficiency has been improved. People's income grew 6.6 percent in real terms, still faster than the growth of GDP per capita, which indicates that the growth of household income almost synchronized with the economic growth. Green development was advanced steadily. Energy consumption per 10,000 yuan of GDP fell by 3.2 percent, the share of clean energy consumption increased, and utilization efficiency of energy and resources was improved. Continued improvement in the environment, especially air quality, was achieved.
The conclusion is that stable performance and improvement in quality and efficiency have complemented and promoted each other. Stability, harmony, inclusiveness and sustainability of the economy have been strengthened, which will lay a solid foundation for the sustainable and healthy economic growth of this year. Thank you.
Phoenix TV:
We are concerned about the situation regarding foreign trade. Although the figures have already been announced, we would still like to ask whether there are preliminary estimates from the National Bureau of Statistics. If the international environment continues to have uncertainties, especially any potential Sino-U.S. trade friction escalation, will it impact on foreign trade in the second quarter or even the second half of the year? And how big will the impact be do you think?
Xing Zhihong:
The issues of foreign trade are everyone's significant concern. Sino-U.S. trade is not only a problem between the two countries, but also an international issue. China has never deliberately pursued a trade surplus. In the past two years, China's trade surplus has been narrowing. The reason why foreign exports continues to grow is because China has comprehensive competitive advantages. At the same time, China's imports have also increased, reflecting the strong growth in domestic demand in China. In our foreign trade, we pursue a trade balance. This kind of balance is also conducive to the development of the domestic economy.
Regarding the issue of Sino-U.S. trade, the Chinese government has already demonstrated its firm stance. The pattern of our opening up to the outside world is further expanding. When one door shuts, another opens. Our trade space is still very large. We can continue to maintain a balance of import and export as the domestic enterprises continuously enhance their competitiveness. Thank you.
China Radio International:
Statistical indexes of export, investment and industry have gone down. Does this mean growth potential will slow down, while pressure on growth will increase?
Xing Zhihong:
I have introduced the statistics from the first quarter to you. The operation of the economy is stable. The "slowdown" was probably caused by some indexes' fluctuation in March, which was mainly caused by factors related to the Spring Festival. It is the most important traditional festival in China. Although the statutory holiday is seven days, its influence lasts much longer than that. The Spring Festival fell in the second half of February this year, which was later than usual. March 2 was the Lantern Festival. So the festival's late arrival had obvious influence on production. In our research and investigation, some export enterprises said they would try their best to export before the festival, and increase imports first after the festival with export gradually speeding up. The trade statistics in March showed clear Spring Festival influence. Also, the number of working days in March this year was one day fewer than last year. The two factors overlapped, causing some of the indexes' fluctuations in March. But beyond seasonal factors, we've found that the trend characteristics of the market and the increase of production have remained unchanged.
As for China's economic development trend in the next stage, it is fair to say that the favorable conditions and factors supporting high quality growth are increasing. China's economy will continue to keep a development trend that features stabilizing growth. As for the supply side, the real economy's vitality is increasing, the quality and efficiency of the supply-side system are improving and the foundation for future growth is becoming more solid.
The situation of agricultural production is comparatively good, with the implementation of a rural rejuvenation strategy and the deepening of agricultural supply-side structural reform. The improvement of agricultural products and the rise of green agriculture have prompted the adjustment of the crop-husbandry structure, further enhancing the comprehensive benefits and competency of agriculture. The growth trend of industry is stable. The industry grew at 6.8 percent in the first quarter, up 0.6 percentage points from the fourth quarter last year. Among the 41 major industries, 37 (90 percent) saw growth, better than the last year. The industrial capacity utilization rate has increased. The advanced manufacturing industry plays an increasingly important role as a driver for the growth of the whole industry. The service industry has maintained stable and comparatively fast development momentum. The production index of the service sectors remained above 8 percent in the first quarter, reaching 8.3 percent in March, 0.3 percentage points higher than January and February and the highest over the past six months. The emerging service sectors, with the internet as a representative, have grown robustly. The development of service industries, especially those related to people's livelihoods, has sped up.
On the demand side, consumption's foundation role is strengthening. And investment's key role in promoting the optimization of supply-side structure has become increasingly outstanding. Currently, foreign and domestic demands both exert powers, pushing supply-demand relations to develop in the direction of dynamic balance and positive cycle.
On the consumption side, the momentum of final consumption's growth is stable. The upgrading of residents' consumption structure has accelerated. The growth momentum of the upgrade-type of commodities is stable. The merging of online and offline consumptions has been expedited. Not only was online retail growing fast, but also traditional commerce, for instance, department stores', supermarkets' and exclusive shop's growth in the first quarter was faster than the same period of last year, reflecting retail's new positive influence in all consumption fields.
The consumption in the service industry is growing robustly. The box revenue grew 39.8 percent in the first quarter. The investment structure is optimizing. The most important change is that civil investment is showing stronger vitality, accounting for more than 60 percent of the total investment. The civil investment grew by 8.9 percent in the first quarter, 2.9 percentage points higher than last year. Meanwhile, the fields of civil investment have expanded further, with some key fields strengthened, which has cast positive influence on supply-side structural optimization and the enhancement of supply-side efficiency.
As for projections, the deepening of reform and opening-up, the growth of driving force generated from innovation and the release of the bonus of a series of policies will consolidate the market players' anticipation and confidence in the future. The growth of the purchasing manager index (PMI) of the manufacturing sped up in March and had expanded for 20 months consecutively. Particularly, the PMI of large-, medium- and small-sized manufacturing enterprises all expanded in March. The non-manufacturing commercial activity index has remained at 54 percent, a positive sign, for seven months continuously. The consumer confidence index reached 122.3, a comparatively high level given its history. So judging from the three aspects of supply, demand and projection, internally generated driving force is becoming stronger. This is the most important support for the sustainable and healthy development of the Chinese economy. Thank you.
Die Welt:
You just answered one question about the problems between China and the United States with the impact of trade, but how bad are you evaluating the whole impact on the Chinese economy if the frictions are going to develop to a sort of a trade war. Thank you.
Xing Zhihong:
The United States disregarded the rules of international trade and clung obstinately to its own course of provoking trade frictions. The international community has been worried about this classic act of trade protectionism and unilateralism and China strongly opposes such acts. Our government has responded firmly and fiercely. People are concerned about the effect on China's economy if the frictions continue. I want to say that in recent years, China's economy has seen increasingly sustained, steady, and coordinated growth, and it has strong resilience, potential and leeway. China-U.S. trade frictions won't change the positive trend of sustained and sound economic development in China.
First, China's economy is resilient and adaptable. In recent years, the supply-side structural reform and innovation have stimulated China's internal driving force and vitality for economic growth. More importantly, major changes in the structure of economy have been brought about. Since the Party's 18th National Congress, economic growth has moved out of the developmental stage of being mainly propelled by the industrial sector into the stage of being propelled by the industrial and service sectors together, out of the stage of being mainly propelled by investment into the stage of being propelled by investment and consumption together. And China has transformed from a large export country into a country placing equal stress on export and import. These structural changes have enhanced the stability and resilience of China's economy.
Over the past few years, the global economy has undergone profound adjustments, and the external environment remains relatively complicated, but China's economy has maintained a growth at a medium-high speed, largely thanks to our economic structure that mainly relies on domestic demand. According to the statistics department, the annual contribution rate of domestic demand to China's economic growth between 2008 and 2017 reached 105.7 percent, a figure more than 100 percent. That is to say, we have been able to hedge the impact of external demand with domestic demand. Especially in 2009 when the international financial crisis hit China hardest, the contribution of domestic demand to China's economic growth exceeded 140 percent.
Last year, the global economy showed an overall recovery, and it was the same case with the external demand. Even under these circumstances, the contribution of domestic demand to China's economic growth remained at 90.9 percent, so this structure is very critical for us to deal with external shocks. Of the domestic demand, final consumer spending is the primary driving force and the biggest engine. I mentioned just now that the contribution rate of final consumer spending, which was 58.8 percent last year, was 77.8 percent in the first quarter this year. The final consumer spending has been the primary engine of China's economic growth for five years in a row. Compared with exports and investment, the volatility of consumption is significantly smaller, and therefore, an economic structural change like this is crucial to the stability of China's economy.
Second, China's economic development has great potential. In an innovation-driven development strategy, development is the top priority, human resources are the primary resources, and innovation is the main driving force.
The widespread entrepreneurship and innovation campaign has greatly bolstered the public's enthusiasm. Presently, more than 10,000 new businesses are established every day. Last year, annual R&D investments accounted for 2.12 percent of the national GDP, higher than the average level of 15 EU countries. Now, China's R&D investment is the second highest in the world. According to a ranking of international organizations, China's innovation index last year ranked 22nd in the world, which means China is leading all middle-income countries in terms of R&D investment.
Because of its entrepreneurship and innovation campaign, China has shifted its reliance on demographic dividends to talent dividends. More than 170 million Chinese people have received higher education and possess specialized skills. They have great potential. This is where China's future lies.
With technological innovation playing an increasingly significant role in promoting development, China's economy has maintained a relatively fast growth rate. Over the past years, China's economic growth rate has remained one of the fastest among major world economies. Last year, China's technological improvements contributed to 57.5 percent of national economic growth and 30 percent of world economic growth.
China's economy has great vigor, dynamic and potential. These factors have greatly enhanced the innovative and competitive capacity of the Chinese economy, making us more capable of dealing with complex situations.
Third, we have ample room to maneuver. China is a big country. We have ample room to maneuver in terms of development, industrial systems and macro regulation.
Regarding development, because of its large territory, China sees different development stages in different regions. Therefore, we are working to accelerate the urbanization drive, to promote coordinated development of the eastern, central, western and northeastern parts, and to foster synergy between the Three Initiatives (the Belt and Road Initiative, the coordinated development of the Beijing-Tianjin-Hebei region, and the development of the Yangtze River Economic Belt), thus to accelerate the balanced development of different regions. The potential of different regions has been further tapped, resulting in new development areas and new development platforms.
Regarding industrial systems, links to all industries can be found in China. This makes us capable of establishing a complete system of industries, promoting the application of scientific and technological advances, and fending off various risks. In this situation, even if some industries are affected, other industries can maintain growth momentum, offset the affected sectors' influence on other industries and on the larger economy, and support and promote the development of the affected sectors. This is a special characteristic of the Chinese economy.
Regarding macro regulation, we also have ample room to maneuver. Presently, China's economy has maintained steady performance; the financial and fiscal systems are running steadily; the foreign exchange reserve is the biggest in the world. As a result, we have plenty of policy tools to use, and they can be used on many occasions.
To sum up, China is fully capable of handling trade conflicts with the United States, responding to various risks and challenges, and maintaining healthy development of its national economy. Thank you.
CGTN:
The service industry producer index has maintained fast growth in the first quarter. And the contribution of the service industry to economic growth is bigger than that of secondary industry. What are your thoughts on the future development of the service industry? Thank you.
Xing Zhihong:
In 2012, the service industry in China surpassed the secondary industry, becoming the largest industry in China's economy. It has contributed greatly to economic development, serving as the main driving engine. Last year, the service industry accounted for 51.6 percent of China's GDP, contributing 58.8 percent to growth. And in the first quarter of 2018, it has maintained a fast growth rate, with proportion and contribution both increasing. China has entered a new phase of economic development driven by the service industry, representing the great progress China has achieved in economic transformation and upgrading. It reflects both the law of economics as well as profound adjustments to policy. The fast growth of the service industry in China is due to the following factors:
First, the upgrading of the consumption structure provides a wider market for the development of the service industry. In accordance with international development experience and economic theory, the growth of the service industry is closely related to residents' income. Currently, China's per capita GDP in last year has reached nearly US$9,000, becoming one of the upper-middle income economies. With the growth of income, people's need for services has made an increasing impact. One of the obvious features of consumption in China is that, in addition to material goods, more and more people are spending money on services such as tourism, culture, education and health care, which injects fresh stimulus and driving force to the development of the service industry.
Second, the division of labor is deepening. The reconstruction of the supply chain, value chain and industrial chain has accelerated China's economic transformation from an industry economy to a service economy. China has now entered the middle and later stages of industrialization, heading toward the mid- and high-end markets. And during the upgrade of the value chain, the manufacturing industry itself creates much need for services with regard to research, design, marketing, management and logistics. It can also be noted from the statistics that technology, business and logistics services have produced new growth highlights.
Third, our efforts to deepen reform and opening-up have further unleashed the growth potential of the service sector. We have been continually expanding market access to the service sector. General Secretary Xi Jinping pledged in his speech at this year's Boao Forum for Asia that China would continue to increase openness, and the service sector is a focus of this endeavor. In fact, we have already set the openness of the service sector as a priority in developing pilot free trade zones. For example, we are easing the cap on foreign ownership in financial services, and the increasing foreign investment and investment from non-government sources in education and health care have given new impetus to the service sector. Additionally, private investment is booming, with a good deal flowing into the social domain.
Four, innovation has boosted the internal forces driving the development of the service sector. New forms and models of business created by the wide application of information technology have made the most salient impact on the service sector. E-health, online sharing and online education services have risen to prominence. Those new forms and models of business have played an important role in maintaining the rapid growth momentum of the service sector. Thank you.
Xi Yanchun:
Due to the time limit, please offer the last question.
Reuters:
You've just mentioned that China's average per capita disposable income grew 6.6 percent in real terms in the first quarter of 2018, lower than the growth rate of 7.3 percent in 2017. Do you think this trend will continue? What's the reason behind it? China's economy performed well in the first quarter. In your opinion, what is the top risk faced by China's economy in realizing steady, sound and high-speed development?
Xing Zhihong:
Let me talk about income first. The nominal growth rate of national resident income in the first quarter of 2018 was 8.8 percent, 0.3 percentage points higher year on year. The growth rates of nominal income for both urban and rural residents are higher than those of the same period in 2017. It shows that people's money bags are fuller this year. Why was there a slowdown in actual growth rate? It is mainly influenced by the factor of prices. In the first quarter of last year, the growth rate of commodity prices was relatively low. Actually, it is not that high this year. It is just 2.1 percent, indeed a mild increase. But compared with that of last year, it's higher and exerts some influence on actual growth of resident income. We can see that the Chinese economy is developing in a steady and sound way and more job opportunities are being created. Mass entrepreneurship and innovation are making progress and the income distribution system is improving. At the same time, our country has placed great emphasis on the growth of resident income and a series of policies have begun to take positive effect. All these will help increase resident income in step with economic growth. The actual growth rate of resident income in the first quarter was 6.6 percent, higher than that of per capita GDP.
Specifically, the performances of enterprises have continued to improve and their operation is in good condition, which provides strong support for the growth of employees' wages. From the rural perspective, the structural reform of the agricultural supply side, the integrated development of the rural primary, secondary and tertiary industries, and the increase in the output and prices of some agricultural products in particular, have created favorable conditions for the growth of agriculture-related incomes. The land reform in rural areas is still ongoing. Farmers have gained property incomes and expanded their income sources through the transfer of the contractual right of land. Thus, the farmers' income grew faster than that of the urban residents. In the first quarter of this year, the increase of farmers' income continued to be higher than that of urban residents, and the income gap between urban and rural residents was further narrowed, which is a good change. Chinese governments at all levels have implemented the guideline of being people-centered and made more investments in people's livelihood. The social security standards have been continuously improved and the security coverage has been further expanded. Both urban and rural residents have gained more transfer incomes. Therefore, the income of citizens across the nation will continue to keep pace with the economic growth. Particularly, the goal to develop a well-off society with doubled incomes can be realized without any problem from the current point of view.
Currently, the biggest challenges facing China's economic development come down to the uncertainties of the international environment and the problems caused by unbalanced and inadequate domestic development. Rising protectionism, the adverse spillovers of major economies' changing monetary policies, and the fluctuation of the financial market may all have an impact on China's economy.
For all the challenges, China's economy, with its strength, strong resilience, great potential and ample leeway, will continue to maintain stable performance with good momentum for growth.
Xi Yanchun:
Thank you, Mr. Xing.
Mr. Xing has no other things than a pen and a piece of paper in hand today, as he is thoroughly familiar with the statistics. And he has made a detailed and in-depth interpretation of those statistics for us.
We appreciate your continued attention on China's economic performance, and please contact the information office of the National Bureau of Statistics if you have other questions.
Thank you, Mr. Xing, and all our friends from the press. That's all for today's press conference.
