South China Morning Post:

In April, the value added of industrial enterprises above the designated size increased by 4.1% year on year. How would you illustrate this? To what extent does it reflect the impact of the situation in the Middle East? Thank you.

Fu Linghui:

Thank you for your questions. We all paid close attention to industrial production. In April, the growth rate of industrial production fluctuated, which is a normal wave between months. In the first four months, the value added of industrial enterprises above the designated size grew by 5.6% year on year, maintaining a stable and relatively rapid growth. Based on the data from April, the steady and positive trend in industrial production remained unchanged. It has been driven by the continuous momentum of industrial upgrading and optimization and faster growth of new drivers. In addition, business expectations improved due to price rebound and profit increase in industrial products. The characteristics are as follows:

First, equipment manufacturing performed well. With advances in industrial technology, China's equipment manufacturing gained robust capacity and maintained rapid growth. In April, the value added of equipment manufacturing enterprises above the designated size raised by 8.3% year on year, 0.1 percentage points faster than the previous month. Its contribution to the growth of all industrial enterprises above the designated size reached 74.5%. In particular, electronics and automotive sectors have become more important as advantageous industries in equipment manufacturing thanks to their continuously advanced competitiveness. The added value of the two sectors increased by 15.6% and 9.2%, respectively. Relying on enhanced manufacturing capabilities, Chinese products not only serve domestic development, but are also well-received by foreign markets. From January to April, the export volumes of automatic data processing equipment and automobiles increased by 28% and 49.5%, respectively.

Second, industrial optimization and upgrading advanced towards the mid-to-high end. In April, the value added of high-tech manufacturing enterprises above the designated size went up by 12.8% year on year, 1.1 percentage points faster than the previous month, and significantly faster than that of industrial enterprises above the designated size. Specifically, the added value of aircraft, spacecraft and equipment manufacturing increased by 15.4%, and that of electronic and communication equipment manufacturing grew by 17.4%. The shift toward digital and intelligent development in the manufacturing sector is progressing steadily. The production of digital and intelligent products has maintained rapid growth driven by the integration of technological and industrial innovation. In April, the added value of digital product manufacturing raised by 12% year on year, 2.4 percentage points faster than the previous month. Among them, the added value of electronic components and equipment manufacturing as well as intelligent equipment manufacturing lifted by 16.4% and 14.3%, respectively.

Third, new drivers grew rapidly. Given the progress in green transformation, new energy-related industries advanced quickly, enhancing the sustainable capacity of economic development, and accelerating the growth of new industrial drivers. In April, the production of hydro-turbine generator sets and lithium-ion batteries increased by 47.5% and 31%, respectively. Emerging industries also developed fast, this was led by cutting-edge technologies such as embodied intelligence and human-machine collaboration. In April, the output of robot reducers and industrial robots grew by 38.3% and 15.1%, respectively. New growth drivers thrive not only in development of emerging and future-oriented industries, but also in transformation and upgrading of traditional industries. In April, the added value of bio-based materials manufacturing increased by 19.5% year on year, contributing 65.6% to the overall growth of chemical fiber industry. Some traditional industries regained growth momentum through transformation and upgrading.

Fourth, business expectations improved. Since the beginning of this year, industrial product prices have rebounded with corporate profits increasing. This is because of both domestic and international factors. In the first quarter, profits of industrial enterprises above the designated size increased by 15.5% year on year. Specifically, profits of equipment manufacturing and high-tech manufacturing grew by 21% and 47.4%, respectively, and profits of high-end manufacturing also saw rapid growth. Steady progress was made in addressing involution-style competition through a holistic approach. This resulted in an optimized market environment, increased corporate profits, as well as improved business expectations. In April, the manufacturing PMI was 50.3%, this put it in an expansionary range for two consecutive months. The manufacturing production and operation activity expectation index was 54.5%, continuing its upward trend since the beginning of the year.

It should be noted that China has maintained stable industrial production despite escalating geopolitical conflicts in the Middle East, volatility in the international energy market, and disruptions to global industrial and supply chains. This performance is underpinned by its complete industrial system, strong supporting capabilities, and the momentum of green energy transformation. The country continues to advance industrial transformation and upgrading, unleashing innovative vitality and demonstrating strong resilience. Against the backdrop of global energy transition and accelerated development of artificial intelligence, China has actively expanded its exports of green and digital products, providing strong support for global economic growth. In the first four months, China's exports of integrated circuits increased by 78.3%, and exports of electric vehicles also increased by more than 60%.

Generally speaking, industrial production has made steady progress, maintaining a trend towards high-end, green, and intelligent development. However, it should be noted that some enterprises are still facing difficulties due to high external uncertainties and increased pressure on operating costs. Going forward, we will earnestly implement the deployment of the Central Conference on Economic Work and the annual meetings of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC). Efforts will be focused on expanding domestic demand, strengthening innovation-driven development, cultivating new-quality productive forces according to local conditions, ensuring stable supply in energy and raw materials markets, alleviating difficulties facing enterprises, to promote high-quality industrial development. Thank you.