Reuters:

Given the May data, what is your outlook for the economic trajectory in the second quarter? What are the main sources of growth? Thank you.

Fu Linghui:

Thank you for your questions. People are closely watching economic growth in the second quarter. Economic growth remained robust in the first quarter, with GDP rising 5%. Since the second quarter, complex changes in the international environment and pressure from domestic structural adjustment have slowed growth in some economic indicators, and some enterprises have faced operational difficulties. However, China's overall development trend remains one of stability and steady progress, with growth continuing to shift toward new drivers and an optimized structure. Looking ahead, despite some difficulties and challenges, the fundamentals supporting long-term growth remain unchanged. The development of new quality productive forces, the continued dividends of reform and opening up, and effective macroeconomic policies will continue to support stable economic operation and its shift toward new growth drivers and an improved structure. Let me give you some details.

First, the economy has a solid foundation and strong resilience. China has a complete industrial system and strong supporting capabilities, backed by the distinct advantages of a super-large market and continuously upgraded infrastructure. These give the country considerable strength to cope with external shocks and resolve internal challenges. Despite significant fluctuations in the global energy market this year, China's economy has withstood the pressure and maintained steady growth, demonstrating strong resilience. From January to May, the value added of industrial enterprises above designated size rose 5.4% and the services production index rose 4.8%, both maintaining relatively rapid growth. The national surveyed urban unemployment rate averaged 5.2% and the CPI rose 1% year on year, both remaining generally stable. Foreign trade grew rapidly, with China's total imports and exports of goods rising 15.3% year on year. The RMB exchange rate remained stable with a slight appreciation, and foreign exchange reserves stayed above $3.4 trillion at the end of May. All this demonstrates that China's economy continues to show resilience and vitality, laying a solid foundation for stable economic performance.

Second, the development of new growth drivers has strong support. Technological innovation is now yielding results after years of buildup, with industrial innovation playing an increasingly evident leading role. New quality productive forces are being cultivated and strengthened, increasingly serving as a robust pillar for high-quality development. By sector, the digital industry and intelligent manufacturing have gained solid growth momentum. In the first five months, value added in the digital product manufacturing industry rose 12% year on year, significantly faster than the overall growth of industries above designated size. The AI industry chain has experienced strong growth, with significant increases in the production of memory chips and industrial robots. In terms of demand, investment in emerging fields has continued to increase, and consumption in cultural, tourism and leisure services has continued to expand, injecting strong momentum into economic development. From January to May, investment in high-tech industries rose 4.5% year on year, and retail sales of tourism services and cultural, sports, and leisure services maintained double-digit growth. Whether in technological development, enterprise production, transportation and logistics, or people's travel and daily consumption, innovation is now ubiquitous and continues to underpin economic development.

Third, reform and opening up has continued to deepen. The construction of a unified national market has achieved positive results, improving the balance of market supply and demand, lifting prices and boosting corporate profitability. In the first four months, profits of industrial enterprises above designated size rose 18.2% year on year. China's institutional opening up has advanced and made solid progress. With the official launch of the China (Inner Mongolia) Free Trade Zone, the frontiers of opening up continue to expand. The visa-free policy has effectively stimulated the potential of inbound tourism, with the number of foreigners entering China under the visa-free policy during the May Day holiday rising 14.7% year on year. Moving ahead, China will continue to vigorously promote the construction of a unified national market, make greater efforts to remove obstacles and bottlenecks, expand opening up, and promote the flow of factors of production in both domestic and international markets. All of these factors will contribute to the sustained and healthy development of the economy.

Fourth, macroeconomic policies have provided strong safeguards. Since the beginning of this year, more proactive and effective macroeconomic policies have continued to take effect. Policies to implement major national strategies and strengthen security capacity in key areas, and policies to promote large-scale equipment upgrades and consumer goods trade-ins, have both improved in quality and effectiveness. The service sector has expanded in scale and improved in quality, while development policies in key areas such as industrial and supply chain security have been introduced successively. Together, these measures have effectively safeguarded stable economic operation. In the face of the spillover effects of international geopolitical conflicts, China has made solid efforts to ensure supply and stabilize prices, safeguarding people's livelihoods and ensuring secure development. Recently, a number of national-level special plans have been rolled out in an orderly manner. With careful implementation of relevant policies, their combined effect will continue to emerge. In particular, given China's ample policy space, abundant reserves, and flexible regulatory tools, the country has the conditions and capacity to promote stable and healthy economic development.

Overall, China's economy is underpinned by a solid foundation, numerous advantages, strong resilience, and great potential, providing favorable conditions for steady and sound economic development. Going forward, we must make full use of macroeconomic policies, strengthen counter-cyclical and cross-cyclical adjustments, continuously expand domestic demand, accelerate the development of new growth drivers, and take solid steps to advance high-quality development and better safeguard and improve people's livelihoods. Thank you.