CNBC: 

The data for July and August indicated a slowdown in the growth of value-added industrial output and fixed-asset investment. What are the differences between August and July? And what factors might have contributed to this? Thank you.

Liu Aihua:

Thank you for your questions. Regarding the changes in industrial production and investment in July and August, I would say, industrial production in July and August was hindered by a combination of factors, including adverse weather conditions like heatwaves, torrential rain and floods. Meanwhile, some industries were also affected by weak market demand. Given all this, the year-on-year growth of value-added industrial output slowed in July and August. Both months experienced relatively fast month-on-month growth. Therefore, the cumulative growth remained stable. Notably, the transformation and upgrading of industries has been advancing, as mentioned previously, with the added value of high-tech manufacturing and equipment manufacturing experiencing robust growth. Investment activities were also affected by extreme weather conditions, with some regions reporting a decline in construction due to persistent high temperatures and extreme weather. Nevertheless, investment continued to expand in scale and improve in structure. Fixed asset investment grew by 3.4% year on year between January and August, and maintained positive growth in August from the previous month. Structural data has revealed several significant features of the current investment situation:

First, investment in the manufacturing sector has been a major driving force for overall investment growth. Investment in the manufacturing industry experienced a 9.1% year-on-year growth in the first eight months, outpacing overall investment by 5.7 percentage points. It contributed 2.2 percentage points to the growth of total investment, making up more than 60% of the total investment growth. Notably, investment in the sectors of equipment manufacturing, consumer goods manufacturing and raw materials manufacturing all saw robust growth, expanding by 10%, 14.9% and 9% year on year, respectively.

Second, investment in high-tech industries has been active. In recent years, China has made concerted efforts to cultivate new quality productive forces, and steadily foster new growth drivers and new strengths. It has stepped up efforts to support sci-tech innovation, witnessing a rapid growth in the investment in high-tech industries. From January to August, investment in high-tech industries expanded by 10.2% year on year, outpacing overall investment growth by 6.8 percentage points. Notably, investment in the electronic and telecommunication equipment manufacturing sector, aerospace and equipment manufacturing sector, as well as information service sector, and services for commercialization of technology breakthroughs surged by 10%, 34.4%, 9.9% and 15.9% year on year, respectively. These all significantly outpaced overall investment growth.

Third, large-scale projects have been a key driver of investment growth. From January to August, investment completed in projects with planned total expenditures of 100 million yuan and above grew by 7% year on year, contributing 3.8 percentage points to overall investment growth. As such, they have played their role as a "cornerstone" in maintaining the momentum of investment growth. 

Fourth, equipment upgrades have yielded significant results. Driven by the policies to promote large-scale equipment upgrades, investment in machinery and equipment has grown rapidly, significantly contributing to overall investment growth. From January to August, investments in purchasing new machines and equipment increased by 16.8% year on year, 13.4 percentage points higher than overall investment growth.

Despite a moderate decrease in the cumulative growth rate of investment, which is due to the impact of extreme weather, investment is currently increasing in terms of both volume and quality. Looking ahead, the issuance and utilization of ultra-long treasury bonds and special government bonds will accelerate, and the policies to promote a new round of large-scale equipment upgrades and trade-in of consumer goods will play a bigger role. Moreover, increased efforts will be made to advance major national strategies and build up security capacity in key areas. As a result, financial support and support for project implementation are expected to be improved, thereby maintaining steady growth of investment. Meanwhile, China still has great potential for progress in cultivating new quality productive forces, transforming and upgrading industries, transitioning toward green and low-carbon economy, and shoring up weaknesses in improving people's livelihoods. These areas offer significant investment opportunities for both the government and enterprises. Investment in such areas will play a greater role in stabilizing growth, adjusting structure, improving supply and benefiting the people. Thank you.