Third, market entities are showing rising confidence. In the first three quarters, the sense of gain among enterprises has been significantly enhanced because we have fully implemented policies to provide relief to businesses and advanced reforms to streamline administration and delegate power, improve regulation, and upgrade services. Positive results were achieved in tax and fee reductions. From January to August, the taxes and fees were further cut by a total of 1.88 trillion yuan, effectively reducing the burden on the operations of market entities. In August, industrial enterprises above designated size reduced their costs by 0.47 yuan per 100 yuan of business income on a year-on-year basis. Business profits have also continued to grow. In August, the profits of industrial enterprises above designated size increased by 19.1% year-on-year, with positive growth for four consecutive months. In August, the profits of service enterprises above designated size increased by 15.5% year-on-year, also an encouraging double-digit growth. Among them, profits of high-tech service enterprises increased by 34.7%. In terms of business expectations, the manufacturing purchasing managers' index stood at 51.5% in September, and for the non-manufacturing business activity, the figure was 55.9%, an increase of 0.5 and 0.7 percentage points respectively over August, both staying above the threshold for seven consecutive months.
In the next stage, the favorable conditions reflected in these three aspects will enable us to further exploit the potential and stimulate the demand of China's super-large market. Generally speaking, we are confident in the economic development of the whole year. Thank you.
Bloomberg:
In the data, the retail sales were down 7.2% in the nine months through September and real disposable urban income is down 0.3% in the same period. With income falling, it's not surprising that retail sales haven't rebounded. What will the government do to support private incomes so that you can realize the new model of dual-circulation which is meant to boost domestic demand. Thank you.
Liu Aihua:
Thank you for your question. Indeed, as you said, judging from the figures of the first three quarters, total retail sales of consumer goods fell by 7.2% in the first three quarters. The decline is mainly because of the impact of the epidemic on consumption demand. In recent months, the growth rate of total retail sales of consumer goods has shown a trend of rebounding. As I mentioned earlier, the growth rate in September was 3.3%, and we have achieved positive growth for two consecutive months. Viewed from the trend, it can be said that the current retail industry has managed to get through the heavy blow from the epidemic and is recovering. In terms of actual performance, while online consumption is maintaining rapid growth, consumption in physical stores also shows momentum of accelerated recovery. I said that the online retail sales of physical goods were up by 15.3% year-on-year. Our research shows that consumption in physical stores is also in the process of recovery. For example, the sales of some supermarkets in the first three quarters increased by 2.9%, indicating that, with the effective control of the epidemic, more people are willing to leave their homes and spend money in physical stores. Hence, consumption in physical stores has bounced back to a certain extent.
The second change is that while consumption of physical goods maintains a relatively rapid growth, service consumption is also recovering. The retail sales of consumer goods in September increased by 4.1%, showing positive growth for several consecutive months. In terms of service consumption, industries that were previously hit hard by the epidemic, such as the accommodation and catering sector, have also shown a recovery trend. The income of the catering sector fell by 2.9% in September. The decline has narrowed for several consecutive months, and has gradually returned to normal levels.
The third is that, while consumption of basic consumer goods has maintained relatively rapid growth, products related to consumption upgrading also saw growing momentum. In the first three quarters, staying at home due to the COVID-19 made people spend more on items such as food, tobacco and alcohol. These kinds of products maintained relatively rapid growth. At the same time, the consumption of products related to consumption upgrading, including cosmetics, gold and silver and jewels, and automobiles, also grew rapidly. These categories realized double-digit returns in September.
Judging from these aspects, the overall recovery of domestic demand is relatively obvious, especially consumption demand. In the second quarter, contribution of final consumption expenditure to GDP growth was a negative 2.3 percentage points, while in the third quarter, the contribution was a positive 1.7 percentage points. From a negative 4.4 percentage points in the first quarter, narrowing down to a negative 2.3 percentage points in the second quarter, to a positive figure of 1.7 percentage points in the third quarter, I think the changes indeed show final consumption expenditure has rebounded after the falls of the previous two quarters. Therefore, generally speaking, the contribution of domestic demand continues to recover and rise. It provides favorable conditions for us to foster a new dual-cycle development architecture. The unlocking of the potential of China's super-large market is not only a manifestation of our strategic focus of boosting domestic demand, but also benefits world economic recovery. Thank you.
