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SCIO briefing on China's economic performance in first half of 2020

The State Council Information Office held a press conference on July 16 in Beijing to brief the media on China's economic performance in the first half of 2020.

China.org.cnUpdated: July 17, 2020

China National Radio (CNR):

We have noticed that prices have remained stable in the first half of this year. At present, we are experiencing a flood disaster, as well as the uncertainties in the epidemic situation at home and abroad. What will happen to our prices in the second half of the year? Recently, due to the impact of the COVID-19 outbreak at Xinfadi market in Beijing, pork prices have shown signs of rising. What will happen to pork prices in the second half of the year?

Liu Aihua:

Thanks for your questions about the consumer price. As you mentioned, consumer prices remained generally stable in the first half of this year, with an overall price rise of 3.8% year-on-year, 1.1 percentage points lower than the first quarter. In terms of monthly changes, the price level has been showing a basical downward trend. In June, the consumer price index rose 2.5% year-on-year, growing within a moderate range. The COVID-19 pandemic and heavy floods posed challenges in maintaining stability. However, we made significant progress in this regard by taking various effective measures. Looking at the composition of the consumer price index, the major growth factor is structural, coming mainly from rising food prices. Among the overall growth of 3.8%, food contributed about 80% of the overall growth, having risen by 16.2% in the first half of the year. In June, the food price rise was 11.1%, and the CPI was 0.1 percentage point higher than the previous month. Food costs also form a major contributor to the overall price level. Looking at the major factors influencing prices in the next half-year, prices of industrial products and consumer goods will not see great changes as the supply and demand situation is basically balanced. Food prices will continue to be a major factor. Yesterday, data from the National Bureau of Statistics showed that the overall output of summer grain increased by 0.9%, creating a pretty solid foundation to maintain grain prices and keeping overall food prices stable. So, there is no reason to expect the price of grain to grow significantly, which means that we are capable of maintaining a moderate growth range.

Your second question is about the trend in the price of hogs. Over the past two years, governments at all levels have taken a series of measures, such as increasing the subsidies and ensuring the level of land used for hog production is sufficient. By the end of the second quarter, the number of pigs registered in stock had grown for three consecutive quarters, measured on a quarter-to-quarter basis. Hog production capacity continues to recover. However, there are challenges in recovering the hog production capacity, such as the impact brought about by heavy floods on the number of pigs that are sent to slaughter in some areas. In June, the pork price increased by 81.6% year-on-year, roughly the same as that of May, which was 81.7%. Positive month-on-month growth was recorded. On the one hand, the measures we took previously are taking effect and the hog production capacity is recovering gradually. On the other hand, we should take notice that the floods affected hog production capacity and hence the pork price. Overall, we have seen notable progress in recovering hog production capacity, and the recovered production capacity will have positive impact on the pork price in the next stage.

Third, there is the impact on vegetable prices caused by floods. Recently, the production, storage and transportation of vegetables in some areas have all been affected by floods. The vegetable price this month reported a positive growth compared to last month. Floods are a temporary problem that may heavily influence the supply of vegetables in the short run, especially in certain areas. However, we all know that the cycle for supplying vegetables is relatively short. And with the supportive policies regarding to production and redistribution of vegetables among different areas, we do not expect great fluctuations in vegetable prices and the vegetable prices will not have a significant influence on the overall price trend in the second half of this year.

Currently, fruit prices are still declining and the price for aquatic products remains stable. Taking these aspects into consideration, food prices overall may fluctuate in the short run but will basically remain stable, with some declines. The overall consumer price will continue to remain stable. Thanks.

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