The Paper:
Recently, the social life and economy of Shanghai and other Chinese regions have been impacted by the COVID-19 pandemic. How does the NBS view this impact? Will it diminish China's possibility of achieving its economic growth target this year? Thank you.
Fu Linghui:
Thanks for your questions. Since the beginning of this year, the world has been suffering from disturbances; the COVID-19 pandemic has continued to sprawl, and geopolitical conflicts have worsened, adding to instability and uncertainty in China's external environment. Domestically, the pandemic has arisen sporadically, and some emergency factors have gone beyond our expectations. All these have compounded the downward pressure on the Chinese economy. However, despite all these unfavorable factors, under the strong leadership of the CPC Central Committee, all localities and departments in China, following a principle of upholding stability as the top priority and pursuing progress on the basis of ensuring stability, have adopted a scientific approach to coordinate pandemic control and social development, intensified efforts to stabilize economic growth, and managed to keep the economy operating within a reasonable range on the whole.
In terms of the next stage's economic trend, though pressure will continue to exist in the short run, China still has many favorable conditions for sustaining steady growth for the whole year.
First, consumption is expected to maintain its recovery momentum. Though the recent pandemic resurgence has restrained consumption growth, recovery momentum will not change, and consumption will still demonstrate its role as the ballast of the Chinese economy. In the first quarter, final consumption contributed 69.4% to China's GDP, still the highest among the three major economic drivers of consumption, investment and exports. As China gradually reins in the impact of the pandemic over time and the employment-first policy continues to pay off, the consumption power and desire of the Chinese people are bound to increase. Meanwhile, China will take other measures to sustain consumption growth, including efforts to promote spending on new energy vehicles, green and smart home appliances, and other big-ticket items. We will also facilitate in-depth integration of online and offline consumption, foster new forms and models of consumer spending, and upgrade and expand the rural consumer market.
Second, the role of investment as a growth driver is expected to grow. Since the beginning of this year, all localities have actively pushed ahead with the construction of major projects, thus stimulating rapid investment growth. In the first quarter, manufacturing investment grew 15.6% year on year, and infrastructure investment by 8.5%. As China continues to scale up support for the real economy and upgrade its traditional industries, and emerging industries continue to gather momentum for innovative development, more favorable conditions will be created for industrial investment growth. Meanwhile, the efforts to make infrastructure investments in an appropriately forward-looking manner centering on China's major strategic initiatives and the 14th Five-Year Plan will also drive investment growth.
Third, industrial upgrading has picked up pace. In recent years, China has taken a slew of measures to promote industrial upgrading, including efforts to further implement its innovation-driven development strategy, grow its strategic scientific and technological strength, enhance its capacity for scientific and technological innovation, beef up incentives for corporate innovation, and raise the proportion of R&D expenses for additional tax deductions. The results of these measures have continued to show. In the first quarter, the added value of high-tech manufacturing expanded by 14.2% year on year, and equipment manufacturing 8.1%, signifying a steady rise in the application of industrial technologies.
Fourth, green and intelligent transformation has become a stronger growth driver. As China makes steady progress in green development, the transition toward green and low-carbon energy accelerates, the demand for new energy products expands, and the requirement for conventional industries to conserve energy and reduce carbon emissions increases, helping to boost the growth of related industries. In the first quarter, the output of new energy vehicles and solar cells increased by 140.8% and 24.3% year on year, respectively. The rapid growth in 5G networks, information technology, and artificial intelligence have also given birth to new sources of industrial growth. In the first quarter, the manufacturing of intelligent consumer equipment grew by 10% year on year.
Fifth, opening up continues to pay dividends. In spite of complicated and challenging international circumstances, the world economy is still recovering on the whole, and demand for China's exports will continue to grow. In the face of the pandemic, Chinese export enterprises have shown strong adaptability to the changes in external demand. Meanwhile, China's policies to stabilize foreign trade have continued to work, the Belt and Road Initiative has continued to deliver benefits, and new forms of business for foreign trade have developed rapidly, all creating favorable conditions for foreign trade growth. In the first quarter, China's imports and exports expanded by 10.7% from a high base last year, showing the resilience of the foreign trade.
Sixth, China's macro-economic policies have continued to pay off. Since the beginning of this year, in the face of the complex situation, all localities and departments have implemented the spirit of the Central Economic Work Conference and the deployments of the government work report. Following the principle of upholding stability as the top priority and pursuing progress while ensuring stability, they have adopted policies to ensure economic stability and increased support for the real economy. China will continue to increase market supply to stabilize prices. In response to the mounting economic downward pressure recently in particular, China will further intensify the implementation of macro policies with early and paced-up arrangements to support market entities, guarantee grain and energy security, maintain the stability of the industrial and supply chains, and meet basic living needs. The policies, as their effects gradually show, will promote steady economic performance.
In general, our country is able to effectively handle all risks and challenges with a complete industrial system, large market scale and broad market space, ample benefits of reform and opening up, and strong economic governance ability. Throughout 2022, the national economy is expected to maintain recovery and development. Certainly, we should pay much attention to the problems we face. According to the decisions and arrangements of the CPC Central Committee and the State Council, we will continue to conduct pandemic prevention and control and pursue economic and social development in a well-coordinated way, enhance the implementation of macro policies, stabilize the macro-economy, and strive to accomplish this year's projected targets and tasks.
Thank you.
