Kyodo News:

Economic growth in the second quarter of 2023 was relatively faster than the same period last year, which was hit by COVID-19, but the international economic situation remains complex. What do you think of the economic growth prospects in the second half of this year? How will you achieve the economic target set for the whole year? Thank you.

Fu Linghui:

Thank you for your questions. In the first half of this year, the Chinese economy overall was in recovery and displayed an encouraging rebound momentum. As the economy and society have returned to normal operations, key indicators have generally improved, new growth drivers have gained strength, the quality of development has steadily risen, and the living conditions of the populace have continued to improve. All these factors have established a solid foundation for achieving the economic and social development targets set for the whole year.

Looking forward to the next stage, despite the complex and challenging external environment and pressures on domestic economic development, the economic fundamentals that will sustain long-term growth remain unaltered. The economy retains its strong resilience, substantial potential, and immense vitality, and the conditions supporting high-quality development remain robust. With the accumulation of positive factors that promote development, the economy is expected to maintain the encouraging momentum of rebound.

First, consumer spending will continue to boost economic growth. Since the beginning of this year, all sectors have actively supported the recovery and increase in consumer spending, gradually unlocking its potential. Consumer spending has played a significant role in boosting economic growth and contributing to the overall recovery. In the first half of this year, final consumption expenditure contributed to 77.2% of economic growth, significantly higher than that of last year. In the next stage, the employment situation will continue to improve further, and personal income will continue to increase, which will help increase people's purchasing power and willingness to spend. Policies aimed at stimulating spending in new energy vehicles and green smart home appliances are expected to have a positive impact on consumption and further support economic recovery.

Second, the service sector will develop better. As the economy and society have fully resumed normal operations, the growth of the service industry has gained significant momentum. Service industries involving direct interaction among people, such as wholesale and retail, accommodation and catering, and transportation, have experienced a notable rebound, substantially contributing to overall economic growth. In the first half of this year, the service sector contributed to more than 60% of economic growth. Looking ahead, there will be an increased demand for services such as cultural tourism, fitness, and sports, as well as producer services such as research and development, design, and business conventions and exhibitions. These factors will drive the service sector to maintain rapid growth and contribute to stable economic performance. The business activity index for the service sector, which registered 52.8% in June, has consistently indicated expansion for six consecutive months.

Third, new growth drivers will become stronger. China has been actively implementing the strategy of innovation-driven development and strengthening its strategic scientific and technological capabilities. Technologies such as modern information technology, artificial intelligence, and big data have been widely applied. Innovative outcomes have continued to emerge, and new industries and new products have grown at a good pace. Since the beginning of this year, significant milestones have been achieved, such as the maiden commercial flight of China's self-developed C919 large passenger aircraft and the successful installation of the world's first 16-megawatt offshore wind turbine. These advancements highlight the ongoing empowerment of high-quality development through scientific and technological innovation. Moreover, the growth of consumer spending on smart products has been expanding, driving the growth of related manufacturing. In the first half of this year, the value-added of equipment manufacturing related to smart product spending increased by 12%. At the same time, in terms of breaking through technological bottlenecks in key fields, the manufacturing sector related to semiconductor-related industries grew relatively fast, and the value-added of manufacturing special equipment for semiconductor devices increased by 30.9%. As for specific products, the output of some new materials and intelligent products has also seen robust growth, with a 23.3% increase in aerospace aluminum production and a 34.1% increase in industrial personal computer (IPC) and system production in the first half of this year. Looking ahead, innovation will provide a stronger boost and inject new impetus into economic development.

Fourth, efforts in green transformation have been significantly rewarded. With a faster pace towards green energy development, we are making progress in promoting green production and lifestyles, and achieving a harmonious coordination between green transformation and economic growth. In the first half of this year, the output of new energy vehicles, solar cells, and charging piles increased by 35%, 54.5%, and 53.1%, respectively. Moreover, there was a 61.6% increase in the export of lithium batteries, solar cells, and electric vehicles. In the upcoming phase, we expect to continue the sound progress of green development, which will contribute to transforming the driving forces of economic growth while improving the quality of economic development.

Furthermore, all localities and departments have been committed to high-quality development, implementing macro policies in a systemic and targeted way, and working hard to expand domestic demand and ensure smooth economic circulation. This endeavor will provide a strong guarantee for stable economic performance. In general, since the beginning of this year, China's economy has gradually shaken off the impact of COVID-19, returned to the track of normal operation, and shown a good recovery momentum. Throughout this year, despite pressure and challenges, our economy will steadily recover, and its development quality will continue to improve as employment improves, personal income increases, domestic demand grows, supply structure adjusts and improves, and new growth drivers become stronger. Therefore, we have the confidence, conditions, and ability to meet the economic and social development targets set for the whole year. Thank you.