Speaker:
Mao Shengyong, director general of the Department of Comprehensive Statistics and spokesperson of the National Bureau of Statistics
Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office
Date:
March 16, 2020
Hu Kaihong:
Ladies and gentlemen, good morning. Welcome to this press conference organized by the State Council Information Office. We have invited Mr. Mao Shengyong, director general of the Department of Comprehensive Statistics and spokesperson of the National Bureau of Statistics, to brief you on China's economic performance in the first two months of this year. He will also be happy to answer your questions. Now I give the floor to Mr. Mao.
Mao Shengyong:
The Chinese economy withstood the impact of the COVID-19 epidemic in January and February. Under the strong leadership of the Communist Party of China (CPC) Central Committee with Xi Jinping at its core, governments at all levels and various departments coordinated to control and prevent the spread of COVID-19 while advancing economic and social development during the first two months of this year. We have already achieved some encouraging phased results. Thanks to promotional policies and measures, enterprises have accelerated resumption of work and production. Industries and social life are gradually returning to normal. The national economy is running smoothly, and fundamental livelihood has been effectively guaranteed.
First, agricultural production has remained strong as spring plowing and farming preparations commence.
The sown area of winter wheat nationwide reached 331 million mu (about 22 million hectares). The present seeding situation is stable, and the growth is generally good. As of the end of February, the proportion of first- and second-class seedlings in the main winter wheat production areas increased by nearly 3 percentage points compared with the same period of last year. The area of vegetable cultivation has expanded. Spring plowing preparation work has been deployed nationwide, and supply of agricultural materials such as seeds, fertilizers and pesticides has been guaranteed.
Second, industrial output decreased but production of important materials saw a constant increase.
From January to February, the value added of industries above designated size fell by 13.5% year-on-year. In terms of different types of economic entities, the value added of state-holding enterprises fell by 7.9%, joint-stock enterprises dropped by 14.2%, foreign-invested and Hong Kong, Macao and Taiwan-invested enterprises fell by 21.4% and private enterprises fell by 20.2%. In terms of the three major categories of industries, the added value of the mining industry fell by 6.5%, the manufacturing industry dropped by 15.7%, and electricity, heating, gas and water production and supply industries fell by 7.1%. In terms of product output, production of medical and protective materials and daily necessities grew rapidly. Output of masks and distilled alcohol increased by 127.5% and 15.6%, respectively, while frozen meat and instant noodles increased by 13.5% and 11.4%, respectively. Growth of high-tech products remains promising. Output of smart watches, smart bracelets, semiconductor devices and integrated circuits increased by 119.7%, 45.1%, 31.4% and 8.5%, respectively. Production of basic raw materials was stable, and the output of cast iron, crude steel, flat glass and 10 non-ferrous metals increased by 3.1%, 3.1%, 2.3% and 2.2%, respectively. According to survey data on purchasing managers nationwide, as of February 25, the resumption rate of large and medium-sized manufacturing enterprises reached 85.6%, and production and operation activities continue resuming smoothly.
Third, the service industry dropped but a new emerging service industry maintained development momentum.
From January to February, the national service industry production index decreased by 13.0% year-on-year. On major industries, the financial industry grew by 4.5%, the information transmission, software and information technology services industry increased by 3.8%, while other relevant industries declined to varying degrees. In February, the business activity index of the service industry was 30.1%, of which the business activity index of the financial industry was 50.1%, which continued to expand. The business activity indices of the telecommunications and internet software industries were 43.3% and 41.4%, respectively, higher than the average of all service industries respectively by 13.2 and 11.3 percentage points, which were significantly better than the overall performance of the service industry.
Fourth, market sales dropped but online retailing of daily necessities and physical commodities increased dramatically.
From January to February, total retail sales of consumer goods exceeded 5.2 trillion yuan (US$743 billion), a year-on-year decrease of 20.5%. Location of business entities made a difference: Retail sales of consumer goods in urban areas hit nearly 4.49 trillion yuan (about US$634 billion), a year-on-year decrease of 20.7%, while retail sales of consumer goods in rural areas were 724.9 billion yuan (US$103.3 billion), a year-on-year decrease of 19%. Across consumption types, catering revenue was 419.4 billion yuan (US$59.7 billion), a year-on-year decrease of 43.1% and retail sales were nearly 4.8 trillion yuan (US$682.8 billion), a year-on-year decrease of 17.6%. Commodities used in daily life showed a trend of growth. Food commodities like grain and cooking oil, beverages and traditional Chinese and Western medicines increased by 9.7%, 3.1% and 0.2%, respectively. From January to February, China’s online retail sales surpassed 1.37 trillion yuan (US$195.3 billion), a year-on-year decrease of 3%. Among them, online retail sales of physical goods exceeded 1.12trillion yuan (about US$160 billion), a year-on-year increase of 3%, accounting for 21.5% of the total retail sales of consumer goods, an increase of 5% over the same period of last year.
Fifth, investment in fixed assets decreased, and investment in high-tech industries and social sectors fell below the average level.
From January to February, investment in fixed assets (excluding farmers) across the country exceeded 3.33 trillion yuan (US$474.7 billion), a year-on-year decrease of 24.5%. Across various sectors, infrastructure investment fell by 30.3%, manufacturing investment fell by 31.5% and real estate investment fell by 16.3%. The sales area of commercial housing nationwide was 84.75 million square meters, down by 39.9%. Sales of commercial housing totaled 820.3 billion yuan (US$116.4 billion), down by 35.9%. Investment in the primary industry fell by 25.6%, investment in the secondary industry fell by 28.2%, and investment in the tertiary industry fell by 23%. Private investment was nearly 1.9 trillion yuan (US$269.7 billion), a year-on-year decrease of 26.4%. Investment in high-tech industries decreased by 17.9%, lower than the average decrease rate of total investment by 6.6 percentage points, of which investment in high-tech manufacturing and high-tech service industries fell by 16.5% and 20.8%, respectively. Investment in inspection services and professional technical services increased by 26.1% and 4.3%, respectively. Investment in the social sector decreased by 20%, of which investment in the health sector decreased by 11.2%, lower than the average decrease rate of total investment by 13.3 percentage points.
Sixth, market prices remained basically stable while the Consumer Price Index (CPI) and the Producer Price Index (PPI) diverged.
In the first two months of this year, China’s CPI rose by 5.3% year-on-year. The prices of food, tobacco and alcohol increased by 15.6%, clothing increased by 0.5%, housing increased by 0.4%, daily necessities and services increased by 0.1%, transportation and communications decreased by 0.4%, education, culture and entertainment increased by 1.6%, and medical care increased by 2.2% while other supplies and services rose by 4.6%. Among food, tobacco and alcohol prices, grain prices rose by 0.6%, fresh vegetables rose by 13.8%, pork rose by 125.6%, and fresh fruit fell by 5.3% compared to the same period of last year. Taking out food and energy prices, the core CPI rose by 1.3%. The CPI saw a year-on-year increase of 5.4% and 5.2% in January and February, respectively, and rose by 1.4% and 0.8% month-on-month.
From January to February, the producer’s price index for manufactured products in China fell by 0.2% year-on-year. The figure increased by 0.1% year-on-year in January, unchanged from the previous month, but fell by 0.4% year-on-year in February and decreased by 0.5% month-on-month. From January to February, the purchasing prices for industrial producers nationwide fell by 0.4% year-on-year.
Seventh, the surveyed unemployment rate rose, but employment of major groups remained generally stable.
From January to February, 1.08 million new jobs were created in cities and towns across the country. In February, the national surveyed unemployment rate in cities and towns was 6.2%, and the surveyed unemployment rate in 31 major cities was 5.7%. The surveyed unemployment rate of prime working aged people between 25 and59 years old was 5.6%, 0.6 percentage points lower than the average level of cities and towns across the country. The unemployment rate for people aged 20 to 24 with a junior college degree or above decreased by 0.4 percentage points from January. The average weekly working hours of employees in enterprises was 40.2 hours, a decrease of 6.5 hours from January.
Eighth, China began to see trade deficit, but its trade structure continued to improve.
From January to February, the total value of imports and exports of goods exceeded 4.1 trillion yuan (US$587.4 billion), a year-on-year decrease of 9.6%. Exports were more than 2.04 trillion yuan (US$290.7 billion), down by 15.9%. Imports were more than 2.08 trillion yuan (US$296.8 billion), down by 2.4%. The trade deficit was 42.6 billion yuan (US$6.1 billion). China's trade structure continued to improve. The share of general trade in total imports and exports was 60.6%, an increase of 0.3 percentage points over the same period last year. The share of imports and exports by private enterprises in total imports and exports was 41.9%, an increase of 1.3 percentage points over the same period last year. China's trade with ASEAN and countries along the Belt and Road maintained a growth trend, with imports and exports increasing by 2.0% and 1.8%, respectively. For the first time, the proportion of imports and exports with countries along the Belt and Road accounted for more than 30% of all of China's foreign trade. From January to February, the export delivery value of industrial enterprises above designated size in China reached nearly 1.36 trillion yuan (US$193 billion), a year-on-year decrease of 19.1%.
The COVID-19 outbreak left a big impact on China's economy in the first two months of 2020, but generally, the impact is short-term, external and controllable. The spread of the virus in China has been basically contained, proving that the control and prevention work has been effective. Fundamental living standards can be guaranteed, society remains stable, and the long-term positive and upward trend of the Chinese economy remains unchanged. Next, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will firmly implement decisions and arrangements from the CPC Central Committee and the State Council including a coordinated response to COVID-19 and measures to ensure social and economic development. While continuing to advance the epidemic control and prevention work, we will constantly aid enterprises in resuming work and production, ensure orderly flow of people and materials, enhance organic alignment of production, supply and sales, and balance imports and exports. By strengthening the hedging force of macro-policies, we will get microeconomic entities back to full steam to reduce the damage caused by the epidemic as much as possible and recover normal social and economic order while boosting stable and healthy economic development.
Hu Kaihong:
Thank you, Mr. Mao. We will now take questions. Please identify your news outlet before asking.
China Media Group:
Major economic indicators point to a decline in January and February. However, the data you just released shows industrial, investment and consumer sectors all plunging beyond expectations. Why did you still say that China's national economy has withstood the shock of the COVID-19 epidemic? Thank you.
Mao Shengyong:
Thank you for your question. We just released our economic performance statistics from the January-February period. The actual performance of those indicators may not exactly match market expectations. Since the novel coronavirus outbreak, to protect the lives and health of the people, the Chinese people have made a concerted effort throughout the country to fight the epidemic under the strong leadership of the CPC Central Committee. Right now, epidemic prevention and control efforts have achieved important, hard-won phased results.
The statistics we released show that the epidemic has indeed made a major impact on China's economy. But in-depth analysis shows that the impact of the epidemic on China's economy will largely be short-term and external. It will not change any fundamentals such as the long-term positive trend and strong upward momentum of the Chinese economy. Essentially, the impact of the epidemic on the economy in the short term is generally controllable. The Chinese economy has withstood the shock of the COVID-19 outbreak during the first two months of the year. How can we reach this conclusion? I would like to explain from the following perspectives:
First, the volume of production demand remains huge, and China's advantages as an economy of super-large scale have not changed. In 2019, China's economic aggregate was close to 100 trillion yuan (US$14 trillion), with per capita GDP exceeding US$10,000. Its output of major industrial products has remained top in the world for several consecutive years. These achievements have provided China with strong material guarantees when responding to emergencies. From January to February this year, despite of the severe impact of the epidemic, the scale and volume of major production indicators remained huge. From January to February, the total output value of industrial enterprises above designated size in China reached 11.5 trillion yuan (US$1.6 trillion), total retail sales of consumer goods exceeded 5.2 trillion yuan (US$743 billion), and fixed-asset investments topped 3.3 trillion yuan (US$471 billion). The scale of China's economy has remained impressive.
Second, as basic industry has managed to provide sufficient supplies, production of anti-epidemic materials has been guaranteed. The strong resilience of the Chinese economy remains unchanged. During the COVID-19 outbreak, productions in important industries vital to national wellbeing and the people's livelihood have never been suspended. Regular production and operations are maintained. Some industries even witnessed remarkable growth. In the first two months of this year, yield of ethylene increased by 5.6%, yields of both crude steel and cast iron increased by 3.1%, and output of 10 non-ferrous metals increased by 2.2%. During the COVID-19 outbreak, demand for epidemic control and prevention products such as masks, protective suits, and ethyl alcohol has soared. Through orderly adjustment, output of these products has increased and relevant production capacity has greatly expanded in a short period of time to satisfy the needs of epidemic prevention and control. Take masks for example: From January to February, statistics from industrial enterprises above designated size show that newly added mask production nearly tripled this year compared to the same period of last year. According to February 29 data from relevant departments, the average daily output of masks reached 116 million, indicating China's powerful supply capacity has adequately supported the supply of medical materials in demand.
Third, supply of basic commodities and public utilities remains abundant. The overall balance between supply and demand has not changed. During the epidemic, the basic livelihood of China's 1.4 billion population has been effectively guaranteed. Total retail sales of consumer goods maintain relatively stable growth. For example, retail sales of meat, poultry and eggs increased by 37.8%, and retail sales of vegetables increased by 27.1%. Output of frozen meat and instant noodles increased by double digits. During the epidemic, the communications sector including the internet and providers of public utilities such as water and electricity, maintain smooth operations to meet the demand of residents. In general, the supply of goods including basic commodities could meet demand. Prices remain stable, and the country maintains overall economic and social stability. None of these achievements were easily won.
Fourth, the internet economy is embracing promising development, and its rapid development momentum has not lost any steam. During the COVID-19 outbreak, the internet has played an essential role in coordinating epidemic prevention and control efforts, allocating supplies, delivering consumer goods, facilitating online education and online remote consultation and maintaining cultural and entertainment consumption. The internet-related industries have seen satisfying growth. From the perspective of market sales, from January to February, online retail sales of physical commodities increased by 3% year-on-year, accounting for 21.5% of the total retail sales of consumer goods, five percentage points higher than the same period of last year. Some high-tech products are still growing in such difficult times. The sales of electronic products such as 3D printers and smart watches have increased by more than 100%, and output of monocrystalline silicon and polysilicon has increased by about 45% and 35%, respectively. Despite the short-term impact of the epidemic on the economy, the momentum of accelerated development of new growth drivers has not changed.
Fifth, China's macro-control policy towards hedging economic risk and uncertainty is strong and effective. We are confident the China can achieve its goals for this year. Recently, the central government introduced a series of policies and measures to support epidemic prevention and control and resumption of work and production including supporting enterprises and boosting production. These policies are gradually taking effect.
The next step of epidemic prevention and control will still be arduous, considering the spread of the coronavirus in some foreign countries has been quite fast. We must continue to consolidate the positive results of epidemic prevention and control and at the same time strengthen international cooperation in fighting the epidemic. In addition, we should push all links in the industrial chains to resume work and production in an orderly manner and accelerate restoration of regular production and life. We must also further strengthen macro policies to hedge the impact of the epidemic as well as external risk and uncertainty. We should promote stable and healthy economic operations and make solid efforts to win the three critical battles of avoiding major risk, performing targeted poverty alleviation and preventing pollution while striving to complete development goals for this year. Thank you.
Bloomberg News:
I have two questions. First, what is your forecast for the first-quarter GDP? Do you expect that being negative? Will that continue to the second quarter considering what is happening globally now, in the U.S., in Europe, and elsewhere? My second question is: Do you expect the jobless rate to continue rising? What will the government do to try to bring that down and decrease the unemployment in China? Thank you.
Mao Shengyong:
Thank you for your questions. First, regarding the first-quarter GDP, I just released the main economic indicators from January and February. Since statistics for the first two months have already come out, the situation in March will be decisive for quarterly data. After deployment of coordinated epidemic prevention and control measures coupled with economic and social development policies from China's central leadership, resumption of work and production has been speeding up since mid-to-late February. We expect a marked improvement in March. This is our prediction.
Second, in the first quarter, economic output in March will account for about 40% of the total, with January and February accounted for the rest 60%. March has taken a larger proportion than either January or February in the economic aggregate. We believe that economic performance in March will be significantly better than that of January and February. This is most likely the case in the first quarter. As for the first-quarter GDP, we must wait until the next month to find out. We will know around the same time in the next month.
As for the next step, our preliminary assessment is: Today, the effectiveness of domestic epidemic prevention and control efforts has become increasingly evident. More importantly, the resumption of work and production is accelerating, and regular production and everyday life are being gradually restored. Domestically, the impact of the epidemic on the economy will decline in the second quarter. By then, some economic activities that have suffered will gradually return to normal. Therefore, the economy in the second quarter is expected to bounce back significantly. In the second half of the year, especially with existing policies and a series of stronger hedging policies which will be introduced, the effects of such measures will become more evident. We believe that China's economy will realize more stable growth in the second half of the year, which will continue as the basic trend for the whole year.
To your second question about the unemployment rate, we did see rising jobless rates in January and February, especially February. The unemployment rate was 5.3% in January and 6.2% in February. We have attributed this mainly to the impact of the epidemic. Production and business activities of enterprises were affected, and demand for labor dropped. As a result, fewer people were employed. How is the jobless rate calculated? The numerator is the unemployed and the denominator is the unemployed plus the employed. If the number of the employed drops, the jobless rate goes up. This is what happened in February. Although the unemployment rate rose in February, we also saw the employment situation of some key groups remained relatively stable. For example, the jobless rate of prime working-age population between 25 and 59 years old was 5.6%, 0.6 percentage points lower than the average. The unemployment rate for people aged 20 to 24 with a junior college degree or above decreased by 0.4 percentage points from January. This is the basic employment situation in the first two months of this year.
Soon, gradual restoration of production and life will increase employment demand and relieve employment pressure. This is our prediction. Due to the resumption of work and production, the employment situation for enterprises is improving, and the demand for labor will continue to increase. A stable approach to gradual recovery of the economy, especially in the second half of the year, will alleviate employment pressure.
In terms of policy, employment is the foundation of public wellbeing and affects every household in this country. The CPC Central Committee and the State Council attach great importance to the employment issue. Employment has been highlighted in policy support of the "Six Stabilities" (which calls for work to stabilize employment, finance, foreign trade, foreign capital, investment and expectations). In terms of macro policy, China has adopted proactive fiscal policy, prudent monetary policy and employment-first policy over the past two years. The country attaches great importance to employment, thus employment policy goes hand-in-hand with fiscal and monetary policies. In general, the employment situation in 2020 has been severe. Overall employment pressure and structural employment problems still exist. However, the central government will continue to increase the hedging effect of macroeconomic policies and strive to help enterprises, especially small and medium-sized enterprises which rely heavily on labor. If we can stabilize enterprises and economic performance, we can stabilize employment. We will strengthen employment-first measures such as improving the training of new employees, transferred employees and migrant workers, making better use of employment funds, and doing more to help and support employment for some key groups like university graduates and migrant workers. Such measures will promote more flexible employment.
In a word, intensified policies will be introduced to realize overall employment stability this year. Thank you.
CNBC:
My question is about employment. The import and export volumes for January and February dropped considerably. What has been the direct influence on the labor market and unemployment rate? Thank you.
Mao Shengyong:
Thank you for another question about employment. First, the epidemic has certainly influenced enterprises, especially small and medium-sized enterprises which have suffered greater blows. Furthermore, the number of college and university graduates this year will reach 8.74 million, a record high, which would exert pressure on the labor market. China's epidemic prevention and control measures have seen remarkable results. However, the situation is still severe outside the country. The world economy is facing emerging challenges including a volatile financial market and commodities prices. The growth rates of the world economy and trade are expected to drop to a certain degree, which will impact China's economy as well. Considering such circumstances, I have to say that such pressure on employment is remarkable.
Second, we should recognize the resilience of China's economy. Riding good momentum from epidemic prevention and control efforts, enterprises are starting to resume operations and production, so recovery of the economy will accelerate in the second quarter or second half of the year. At the same time, stronger hedging macro-policies will be introduced. Stronger policies to promote employment will also come into force. Employment will certainly improve in the second half of the year, and the surveyed unemployment rate will decline. Thank you.
The Cover:
I have a question about pricing. We noticed that the growth rates of CPI in January and February remained at around 5%. The People's Bank of China recently cut the requirement reserve ratio for RMB deposits again and subsequent monetary policy will likely be looser. Will such measures lead to higher prices? Thank you.
Mao Shengyong:
First, to the questions about the prices of consumer goods, the growth rates of CPI in January and February did stay above 5%, which is relatively high. The year-on-year growth rate of CPI in February, however, was 5.2%, 0.2 percentage points lower than that of January. And the growth rate compared to the previous month was 0.8%, 0.6 percentage points lower than the January level. In general, there are three major reasons behind the high CPI growth rate over the first two months of the year. First, food. The high growth rate of CPI at present has mainly been caused by a rise in food prices, especially the price of pork, which recorded a year-on-year growth rate of 135.2%. Pork prices contributed 3.2 percentage points to the CPI growth rate. That means that 3.2 of the 5.2 percentage points were from pork. The growth of food prices has remained high. Second, the epidemic has taken a toll. Prevention and control measures by concerned parties have raised cargo transportation costs. Third, the tail-raising factor. Volatile prices in last year have had major influence on the first two months of 2020. It should be noted that the growth rate in February which exceeded 5% could have easily been only 1% without major contributions from food and energy, 0.5 percentage points lower than that of the previous month, maintaining a relatively low level. This shows that although the CPI is high, it is mostly caused by structural factors.
Second, it is doubtful that the CPI would grow even faster in the following period. Why? The three factors I just mention: The first is food. China achieved record high grain production last year. Agricultural production still has pretty strong momentum. Hog inventory and those available for slaughter have both increased year-on-year. The price of hog has gradually declined from a peak. Compared to mid-February, the price of hog dropped by 4.6% in late February, and the figure further decreased by 1.3% in early March. So, pork price shows a general trend of tumbling from recent highs. The second factor is the epidemic. Following effective prevention and control efforts, logistics and operation of enterprises are recovering quickly. Supply of industrial goods will increase and circulation of materials will be further smoothened, which will help stabilize prices. Third is the tail-raising factor. From the big picture of the whole year, the tail-raising factor of prices will diminish, especially in the second half of the year. There is no evidence pointing to a continuous surge in the CPI. The growth rate of CPI will steadily decline, especially in the second half of the year.
Third, the monetary policy. In the context of the epidemic and complicated and grave situation in China and around the world, macro policies should be stronger and prudent monetary policies should be more flexible and moderate. We have carried out targeted cuts of the requirement reserve ratio, directed lowering of interest rates and increased refinancing and rediscount. The core purpose of those measures is to support enterprises through maintaining rational liquidity and encouraging decrease in interest rates or quoted interest rates. So instead of strong stimulus policies that would have economy-wide impact, we opted for targeted aid, which will not drive price growth dramatically from the perspective of monetary policy.
Although recent price growth rates have been remarkable, the growth rate of the CPI is highly likely to taper off in the future. Thank you.
Market News International:
The epidemic spiked in February. The economy in January should have been mostly normal. Can you estimate the total impact on February? Will production and consumption fully recover by April? With the "two sessions" postponed, will this influence the formulation and implementation of economic development targets for this year, especially the second half of the year? Thank you.
Mao Shengyong:
Thank you for your questions. To offset the influence of the Spring Festival holiday, the major indicators of January and February are always calculated together because the Chinese New Year can fall in either January or February, which brings some volatility. This year was not the first time the statistics were combined. It has always been this way. The economy was pretty good before January 23. It was operating normally. Then it was influenced by epidemic prevention and control. So, the economy was mostly impacted in February. Since mid-February, however, the central government has been coordinating epidemic prevention and control with economic and social development. And the disruption has been abated. Enterprises are resuming production gradually and life is creeping back to normal. This is how things developed across January and February.
Generally, the disruption in February was bigger than in the previous month. I think that life and production have accelerated towards full recovery. Different departments have different angles and samples of statistics in terms of the resumption of operations of enterprises above designated size. The National Bureau of Statistics conducted three quick surveys from February 12 to 29. By February 29, the ratio of enterprises above designated size, including major industrial and construction enterprises, that resumed production increased by 19.8 percentage points compared to the previous week. Recently, statistics released by relevant departments showed that 95% of enterprises above designated size in regions outside Hubei Province have resumed production. We believe that great progress has been made in terms of resumption of work.
Nevertheless, the epidemic is still spreading elsewhere in the world, which will probably cause uncertainty for us. For this reason, we should continue epidemic prevention and control in earnest. Meanwhile, we should promote resumption of production and a return to normal life. We will strengthen international cooperation on epidemic prevention and control and play a key role as a responsible major country in helping other countries combat the epidemic. After March, especially in the second quarter, production and daily life will largely return to normal.
As for the targets set at the "two sessions," that is normally where major targets for the economic and social development for the year are determined. Those targets reflect the performance of every sector in economic development. But they should be formulated according to the actual situation. Facing the disruptions caused by the outbreak, strong hedging policies will be introduced to diminish the impact of the epidemic and keep things on track to meet the targets set for the year, especially poverty alleviation. Thank you.
Phoenix TV:
Director General Mao, you just mentioned that we should still strive to achieve annual development goals and tasks. What are the specific goals and tasks? Were you referring to the targets of doubling 2010 GDP and per capita income by 2020? Do you think that considering the current situation, it would be advisable to reduce the economic growth target for this year? Thank you.
Mao Shengyong:
Building a moderately prosperous society in all respects was the first of the Two Centenary Goals set at the 18th CPC National Congress. It remains a solemn commitment made by our Party and must be realized. However, the concept of a moderately prosperous society in all respects has profound connotations. According to my personal understanding, the most important thing now is still resolutely winning the battle against poverty. General Secretary Xi Jinping recently made an important speech which we should earnestly study. He mentioned ensuring that the current 5.51 million poor people are lifted out of poverty according to existing standards and that poverty relief is a quality goal that should satisfy public demand and withstand tests of history and practice. Second, it is now very important to continue to consolidate gains in epidemic prevention and control. We should accelerate the resumption of production and living order and strive to return economic operation to a track of healthy development. All policies, including fiscal, monetary and employment policies, should serve these development goals.
As for annual development goals, we still need to reference the Report on the Work of the Government at the "two sessions." Once the goals are set, all people of the country will strive to achieve them. Thank you.
China Media Group:
We noticed that investment in fixed assets is constantly decreasing and that the sales area and volume of commercial housing are also declining. It was recently announced that housing price growth rates in 70 large and medium-sized cities in February are steadily falling. What is your opinion of the drops? Will the housing market stay cold? How will this affect the overall national economy? Thank you.
Mao Shengyong:
Thank you for your question. On real estate, I think the policy is very clear. First, the prohibitions on real estate speculation have not changed. In recent years, we have constantly strengthened and improved real estate regulation and control policies, implemented differentiated policies for various cities and enhanced key responsibilities of cities. In past few years, the real estate market has remained generally stable, especially in terms of stabilization of land prices, expectations and housing prices.
Second, it is still clear that development policy on real estate should promote high-quality development. It is not the realm for short-term stimulus policy.
Third, regarding investment, China's perspective of areas and space for investment is quite large and includes manufacturing, infrastructure and other areas. Next, we should continue to increase policy support for investment. For example, recently, 23 departments issued suggestions and measures to improve consumption quality and expand consumption capacity. We also need to increase the effectiveness of investment which includes investment in relatively weak areas, promotion of industrial upgrading and strengthening areas of weakness in public service including the emergency response system. The areas and space for investment are huge. Our next step is not only to strengthen effective investment, but also to improve consumption quality and expand consumption capacity. We should make better efforts at the intersection of promoting consumption and expanding investment to maintain the overall stability of our economic operations. Thank you.
South China Morning Post:
Recently, new infrastructure such as 5G and the industrial internet has become a hotly discussed topic, which is expected to become the driving force for economic growth in the rest of the year. Does the National Bureau of Statistics have a comment on this? Is there a forecast for the scale of investment in new infrastructure? Is it able to keep China's economy in a reasonable range? Thank you.
Mao Shengyong:
Thank you. We have seen many recent online discussions on this matter. The core of this issue is the basic orientation of next-step macro policy. To support epidemic prevention and control, including supporting affected enterprises, we recently introduced a series of policies and measures that have already achieved favorable outcomes. To better hedge against the impact of the epidemic including external risks and challenges, we will increase the adjustment of macro policies in the next step. For active fiscal policy, we should seek greater effectiveness. For prudent monetary policy, we should be more flexible and appropriate. We should further strengthen the employment priority policy, which is a basic policy orientation. From the perspective of fiscal policy, we need to further reduce the burdens on enterprises and promote tax cuts and fee reductions. Over the past two years, we have made great efforts to reduce taxes and fees. This year, we will continue these efforts including the reduction of fees, reduction of energy and gas costs and other areas. The monetary policy has the same goal. To provide targeted assistances for enterprises, we should maintain reasonable and sufficient liquidity and strive to reduce loan costs.
Another perspective is domestic and external demand. As of domestic demand, we need to expand consumer demand and investment demand. The two "wheels" should align with each other. There is still much space for investment, including many weak areas that require industrial upgrading and technological progress and some inadequate areas in public service. All of these need greater efforts in the future. We should work hard at the intersection of expanding consumption and investment to achieve better results. If we can better leverage private investment, the results will be better. Therefore, we believe that expansion of investment and consumption should happen simultaneously.
Second is external demand. Although domestic demand is our central driving force, we should actively consolidate external demand. We should further strengthen the reform and opening up, actively consolidate foreign investment and trade, stabilize the foundation of foreign investment and trade and stimulate the vitality, dynamic and potential of microeconomic entities. In future reform and opening up, we need to keep moving forward with greater momentum.
In a nutshell, we must pay attention to both domestic and external demand and reinforce the foundation of external demand. Domestic demand is the key driving force, but neither investment nor consumption can be tailored exclusively to domestic demand. The fields and space of investment will be more focused on eliminating weaknesses and strengthening potential, promoting industrial upgrading and enhancing the level and capacity of supply. Thank you.
Hu Kaihong:
Due to limited time, we can take two more questions.
Reuters:
Will the noticeable growth in unemployment rate in February exert a far-reaching impact on Chinese incomes and future consumption? The national debt-to-GDP ratio is also getting a lot of attention—will it surpass 3%? Thank you!
Mao Shengyong:
To the first question about the unemployment rate, in February, China's unemployment rate did increase. This was mainly because enterprises' demand for labor obviously decreased due to the impact of the epidemic, resulting in a drop in employment. However, this situation won't last long. With more enterprises resuming production and operations, demand for labor will grow and employment will increase, causing the overall unemployment rate to drop. It is predictable that the rise in unemployment in January and February will have a negative impact on residents' income growth in the first quarter of this year. From the second quarter, with production and daily life returning to normal and enterprises creating more jobs, especially when economic recovery reaches robust levels by the second half of the year, the income growth rate is expected to gradually improve.
To the second question about the fiscal deficit, the Chinese government's overall debt level remains relatively low at present. In terms of policies to be taken, we need to further reduce taxes and fees to relieve the burdens on enterprises and help them overcome difficulties in this time of crisis while at the same time implementing a proactive fiscal policy composed of more active, effective measures. In general, the overall national debt of China remains relatively low. Some assets arising from debts are even profitable. In this sense, we still have plenty of room to appropriately raise our budget deficit ratio. Thank you!
Ta Kung Pao & Wen Wei Po:
How many percentage points of GDP growth by the end of this year does China need to achieve its 2020 targets on economic development and its goal of doubling its 2010 GDP? One more question: You just mentioned that China would expand domestic demand while consolidating external demand, but do you think global proliferation of the epidemic will affect China's overall external demand?
Mao Shengyong:
As of your first question on the goal of doubling China’s GDP from 2010, I think the core of the question is China's economic growth this year. Indeed, the economy is facing some headwinds since the year started: On the one hand, the epidemic has left a clear negative impact on the economy in the first quarter, especially January and February, and on the other hand, the external environment is seeing new changes like sharp fluctuations in the financial market and commodity prices, resulting in gloomy predictions that global economic growth may slow. However, there are some encouraging factors emerging out there: First, the results of epidemic prevention and control in China are going to leave the country stronger. Second, progress has been continuously made in coordinating epidemic control and socioeconomic development and helping enterprises resume production and operations. Third, after the results of epidemic prevention and control are further consolidated, the endogenous dynamic of the Chinese economy will be constantly unleashed, and economic activities that were temporarily contained will reactivate. In the next stage, if work on epidemic prevention and control proceeds well, China will land on a good foundation for strong economic growth in the rest of the year. Especially after more robust hedging policies are implemented, the effects will continue emerging in the second half of this year. I am confident that China will maintain stable, healthy economic development this year.
To your second question on the epidemic's impact on China's foreign trade: So far, the epidemic has been basically contained in China, but it still maintains momentum of rapid spread outside of China. Certainly, the pandemic situation will impact China's foreign trade. Under this circumstance, two things are extremely important: First, we must continue advancing epidemic prevention and control instead of just calling it a day. In addition to stepping up epidemic prevention and control domestically, we also need to strengthen international cooperation on prevention and control of the epidemic. China has gained valuable experience on this very task and should play a more prominent role as a responsible major country. Second, the global economy is facing some difficulties. Those irrational trade rules and barriers should be removed and abolished to enable the world economy to more effectively offset the impact of the epidemic and bring global trade back to normal. Thank you!
Hu Kaihong:
The press conference is hereby concluded. Thank you, Mr. Mao. Thank you all.
