SCIO briefing on China's economic performance in Q1

Speaker:

Fu Linghui, spokesperson of the National Bureau of Statistics (NBS) and director general of the Department of Comprehensive Statistics of the NBS

Chairperson:

Shou Xiaoli, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and SCIO spokesperson

Date:

April 18, 2022

Shou Xiaoli:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). This is a regular briefing on China's economic data. Today, we are joined by Mr. Fu Linghui, spokesperson of the National Bureau of Statistics (NBS) and director general of the Department of Comprehensive Statistics of the NBS. Mr. Fu will brief you on China's economic performance in the first quarter of 2022 and then take your questions.

Next, I'll give the floor to Mr. Fu.

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Fu Linghui:

Friends from the media, good morning. As usual, I will start by briefing you on the economic performance in the first quarter of this year and then take your questions.

In short, China's national economy got off to a generally stable start in the first quarter.

In the first quarter, faced with the multiple tests of an increasingly grave and complex international environment and frequent outbreaks of COVID-19 at home, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments have strictly implemented the decisions and arrangements made by the CPC Central Committee and the State Council, coordinated COVID-19 prevention and control efforts and economic and social development in a reasonable way, made economic stability the top priority, and pursued progress while ensuring stability. As a result, the nation's economic recovery was sustained and the operation of the economy was generally stable.

According to preliminary estimates, gross domestic product (GDP) in the first quarter reached 27.02 trillion yuan, up by 4.8% year on year at constant prices, or up by 1.3% compared with the fourth quarter of 2021. By industry, the value added of the primary industry was 1.1 trillion yuan, up by 6% year on year; that of the secondary industry was 10.62 trillion yuan, up by 5.8%; and that of the tertiary industry was 15.3 trillion yuan, up by 4%.

First, agricultural production was stable and animal husbandry grew steadily.

In the first quarter, the value added of agriculture (crop farming) witnessed a year-on-year increase of 4.8%. With generally favorable weather conditions and stronger agricultural production services, spring farming and preparation were carried out in a steady and orderly manner. According to the year-round planting intentions survey, the nationwide planting area intended for wheat and rice was generally stable and that for soy beans increased considerably. In the first quarter, the output of pork, beef, mutton and poultry was 23.95 million metric tons, up by 8.8% year on year. Of this total, the outputs of pork, beef and mutton were up by 14%, 3.6% and 1.4%, respectively. The output of milk increased by 8.3% and that of eggs went up by 2.5%. At the end of the first quarter, the number of pigs registered in stock was 422.53 million, up by 1.6% year on year, of which 41.85 million were breeding sows.

Second, industrial production grew quickly and the mid-to-high end manufacturing industry enjoyed sound growth.

The total value added of industrial enterprises above designated size grew by 6.5% year on year in the first quarter. In terms of sectors, the value added of mining increased by 10.7% year on year, that of manufacturing increased by 6.2%, and that of the production and supply of electricity, thermal power, gas and water increased by 6.1%. The value added of high-tech manufacturing and equipment manufacturing increased by 14.2% and 8.1%, respectively, which were 7.7 percentage points and 1.6 percentage points faster than that of industrial enterprises above designated size. An analysis by types of ownership showed that the value added of state holding enterprises was up by 5% year on year; that of share-holding enterprises was up by 7.8%; that of enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan was up by 2.1%; and that of private enterprises was up by 7.6%. In terms of products, the production of new-energy vehicles, solar cells and industrial robots rose by 140.8%, 24.3% and 10.2%, respectively. In March, the value added of industrial enterprises above designated size grew by 5% year on year, or 0.39% month on month. In March, the Manufacturing Purchasing Managers' Index stood at 49.5%, and the Production and Operation Activity Expectation Index was 55.7%. In the first two months, the total profits by industrial enterprises above designated size reached 1.16 trillion yuan, up by 5% year on year.

Third, the service sector continued to grow and modern services registered a solid growth momentum.

In the first quarter, the service sector continued to recover. Specifically, the value added of information transmission, software and information technology services and financial intermediation grew by 10.8% and 5.1% year on year, respectively. The Index of Services Production increased by 2.5% year on year in the first quarter and decreased by 0.9% year on year in March. In the first two months, the business revenue of service enterprises above designated size grew by 13.6% year on year. In March, the Business Activity Index for Services stood at 46.7%, and the Business Activity Expectation Index was 53.6%. Industries involving the close contact and gathering of people, such as railway transportation, air transportation, lodging and catering, were greatly impacted by the pandemic. The Business Activity Index for industries including telecommunication, broadcast, television and satellite transmission services, monetary and financial services, and insurance services stayed within the high expansion range of 55% and above.

Fourth, market sales maintained growth and online retail sales were active.

In the first quarter, the total retail sales of consumer goods reached 10.87 trillion yuan, up by 3.3% year on year. Analyzed by different areas, the retail sales of consumer goods in urban areas reached 9.43 trillion yuan, up by 3.2%, and that in rural areas reached 1.44 trillion yuan, up by 3.5%. Grouped by consumption patterns, the retail sales of goods were 9.8 trillion yuan, up by 3.6%; the income of catering was 1.07 trillion yuan, up by 0.5%. Goods related to people's basic living enjoyed good sales, with the retail sales of grain, oil and food, and daily necessities by enterprises above designated size up by 9.3% and 6.6%, respectively. The sales of upgraded consumer goods grew fast. The retail sales of cultural and office supplies, and gold, silver and jewelry by enterprises above designated size grew by 10.6% and 7.6%, respectively. Online retail sales reached 3.01 trillion yuan, up by 6.6%. Specifically, the online retail sales of physical goods were 2.53 trillion yuan, up by 8.8%, accounting for 23.2% of the total retail sales of consumer goods. In March, the total retail sales of consumer goods reached 3.42 trillion yuan, down by 3.5% year on year and 1.93% month on month.

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Fifth, investment in fixed assets increased, and investment in high-tech industries and social sectors grew fast.

In the first quarter, the investment in fixed assets (excluding rural households) reached 10,487.2 billion yuan, up by 9.3% over that of the previous year. Specifically, the investment in infrastructure was up by 8.5% year on year; that in manufacturing was up by 15.6%; and that in real estate development was up by 0.7%. The floor space of commercial buildings sold stood at 310.46 million square meters, down by 13.8%. The total sales of commercial buildings were 2,965.5 billion yuan, down by 22.7%. By industry, the investment in the primary industry went up by 6.8%, that in the secondary industry up by 16.1%, and that in the tertiary industry up by 6.4%. Private investment totaled 5,962.2 billion yuan, up by 8.4%. The investment in high-tech industries grew by 27.0%. Specifically, the investment in high-tech manufacturing and high-tech services grew by 32.7% and 14.5%, respectively. In terms of high-tech manufacturing, the investment in the manufacturing of electronic and communication equipment and in the manufacturing of medical equipment, measuring instruments, and meters grew by 37.5% and 35.4%, respectively. Regarding high-tech services, investment in information services and services for the transformation of scientific and technological achievements went up by 21.3% and 19.0%, respectively. Investment in social sectors increased by 16.2%. Specifically, the investment in the health sector and education sector increased by 23.8% and 17.2%, respectively. In March, the investment in fixed assets (excluding rural households) went up by 0.61% month on month.

Sixth, imports and exports of goods witnessed rapid growth, and the trade structure continued to optimize.

In the first quarter, the total value of imports and exports of goods was 9,415.1 billion yuan, an increase of 10.7% over that of the previous year. The total value of exports was 5,226.0 billion yuan, up by 13.4%, while that of imports was 4,189.1 billion yuan, up by 7.5%. The trade balance was 1,036.9 billion yuan in surplus. The imports and exports of general trade increased by 13.9%, accounting for 63.2% of the total value of imports and exports, 1.8 percentage points higher than that of the same period of the previous year. Imports and exports by private enterprises accounted for 48% of the total value of imports and exports, 1.4 percentage points higher than the same period of the previous year. In March, the total value of imports and exports was 3,206.5 billion yuan, up by 5.8% year on year. The total value of exports was 1,753.5 billion yuan, up by 12.9%, and that of imports was 1,453 billion yuan, down by 1.7%.

Seventh, consumer price experienced mild growth, and the year-on-year growth of producer prices for industrial products slowed down.

In the first quarter, the consumer price index (CPI) grew by 1.1% over that of the previous year. Specifically, the CPI in urban areas went up by 1.2%, and that in rural areas went up by 0.7%. Grouped by commodity categories, prices for food, tobacco, and alcohol went down by 1.3% year on year; clothing up by 0.5%; housing up by 1.4%; articles and services for daily use up by 0.6%; transportation and communication up by 5.5%; education, culture, and recreation up by 2.6%; medical services and health care up by 0.6%; and other articles and services up by 0.7%. In terms of food, tobacco, and alcohol prices, the price of grain went up by 1.7%, fresh fruit up by 6.9%, fresh vegetables up by 3.7%, and pork down by 41.8%. The core CPI, excluding the price of food and energy, grew by 1.2% over that of the previous year. In March, the consumer price index went up by 1.5% year on year, 0.6 percentage points faster than that of February, and maintained the same level month on month.

In the first quarter, producer prices for industrial products went up by 8.7% year on year. Specifically, the prices in March went up by 8.3% year on year, 0.5 percentage points lower than the growth in February, or up by 1.1% month on month. In the first quarter, the purchasing prices for industrial producers went up by 11.3%. Specifically, the prices in March went up by 10.7% year on year, 0.5 percentage points lower compared with the growth in February, or up by 1.3% month on month.

Eighth, newly increased employment in urban areas expanded, and surveyed unemployment rate increased.

In the first quarter, the newly increased employed people in urban areas numbered 2.85 million, and the urban surveyed unemployment rate averaged 5.5%. In March, the urban surveyed unemployment rate was 5.8%, 0.3 percentage points higher compared with that in February. The surveyed unemployment rate of the population with local household registration was 5.6%, and that of the population with non-local household registration was 6.3%, among which the rate of the population with non-local agricultural household registration was 5.9%. Specifically, the surveyed unemployment rates of the population aged from 16 to 24 and from 25 to 59 were 16.0% and 5.2%, respectively. The urban surveyed unemployment rate in 31 major cities was 6%. The employees of enterprises worked 47.3 hours per week on average. At the end of the first quarter, the number of migrant workers who left their hometowns and worked in other places totaled 177.8million.

Ninth, residents' income increased stably and urban-rural per capita income ratio narrowed.

In the first quarter, the nationwide per capita disposable income of residents was 10,345 yuan with nominal growth of 6.3% year on year, or a real growth of 5.1% after deducting price factors. In terms of permanent residence, the per capita disposable income of urban households was 13,832 yuan with nominal growth of 5.4% year on year and real growth of 4.2%; the per capita disposable income of rural households was 5,778 yuan with nominal growth of 7.0% year on year and real growth of 6.3%. In terms of income source, the nationwide per capita salary income, net operative income, net property income, and net income from transfers saw a growth of 6.6%, 5.4%, 6.1%, and 6.3% in nominal terms, respectively. The per capita disposable income of urban households was 2.39 times that of rural households, 0.04 less than the ratio of the same period last year. The median of nationwide per capita disposable income of residents was 8,504 yuan with nominal growth of 6.1% year on year.

Generally speaking, the national economy in the first quarter continued the momentum of recovery, performing within the reasonable range. However, we must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, economic development is facing significant difficulties and challenges. In the next stage, we must follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and fully implement the guiding principles of the Central Economic Work Conference and the arrangements made by the government work report. We must coordinate the COVID-19 response and economic and social development, make economic stability our top priority, and pursue progress while maintaining stability, ensuring stable growth in an even more prominent position. We must further strengthen the implementation of macro policies, take solid steps to ensure stability on six key fronts (employment, the financial sector, foreign trade, foreign investment, domestic investment, and expectations) and security in six key areas (job security, basic living needs, operations of market entities, food, and energy security, stable industrial and supply chains, and the normal functioning of primary level governments), focus on maintaining stable macroeconomic performance, continue to stabilize employment and prices, ensure basic living needs are met, and keep the economy performing within an appropriate range.

Thank you.

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Shou Xiaoli:

Thank you for your introduction, Mr. Fu. Let's move on to the question-and-answer session. Please identify the media outlet you represent before asking a question.

CNR:

According to the newly-released major economic indicators for the first quarter, industrial production has maintained rapid growth. What are the reasons? What are your expectations for its performance in the days to come? Thank you.

Fu Linghui:

Thanks for your questions. Industrial production has maintained stable overall this year due to the policies and measures to promote a stable performance of the industrial sector. As a result, the total value-added of industrial enterprises above the designated size grew by 6.5% year-on-year in the first quarter, higher than that of the fourth quarter of last year, and it has maintained rapid growth. Such rapid growth in industrial production results from economic recovery both domestically and globally, and it is also due to industrial innovation as an enhanced driving force and industrial upgrading as a continued driver. Moreover, ramped-up efforts to ensure market supply and rapid growth in relevant sectors have also contributed.

First, the industrial upgrading has been outstanding as a driving force. Market demand for medium- and high-end products has increased due to the changes in our stage of development. Moreover, industrial upgrading has been accelerated thanks to the effective implementation of the innovation-driven development strategy. As a result, the equipment manufacturing industry has seen sound development, and the high-tech manufacturing sector has witnessed rapid growth, greatly supporting the development of the industrial sector. The value-added of the equipment manufacturing industry increased by 8.1% year-on-year in the first quarter. Among these, the value-added of the electrical machinery and equipment manufacturing sector and the electronic equipment manufacturing sector, such as computers and telecommunications, increased by more than 10%, boosting the value-added growth of industrial enterprises above the designated size by around 1.7 percentage points. The value-added of the high-tech manufacturing industry increased by 14.2% year-on-year in the first quarter, which is also markedly higher than the overall growth of the industrial enterprises above the designated size.

Second, the output of the consumer goods manufacturing industry has increased. Given the sustained economic recovery, people's demand for consumer goods has grown, leading to growth in the relevant manufacturing sector. The value-added of the consumer goods manufacturing sector climbed 8.1% year-on-year in the first quarter, along with that of the agricultural and sideline food processing sector, the food manufacturing sector, as well as the sector of wine, beverage, and refined tea manufacturing, and the sector of the pharmaceutical manufacturing rising 6.4%, 6%, 12.1%, and 11.8%, respectively. These four sectors have boosted the value-added growth of industrial enterprises above the designated size by around 1 percentage point.

Third, the exports of industrial products have witnessed rapid growth. China has a complete industrial system with strong industrial supporting capability, facilitating it to adapt to changes in global market demands quickly. The increased demand for our industrial products exports to the international market has boosted China's industrial output. The export delivery value of the industrial products climbed 14.4% year-on-year in the first quarter, maintaining rapid growth. The auto manufacturing sector and the specialized equipment manufacturing sector both rose by more than 20%.

Fourth, the production of the coal and power industries has seen an increase. We have stepped up efforts to ensure the supply of energy and raw materials. Thereby the output of the relevant sectors has witnessed rapid growth. The value-added of the mining sector increased by 10.7% year-on-year in the first quarter, with that of the coal mining and dressing sector climbing 13.2%. Moreover, the sector of production and supply of electricity and thermal power and the gas production and supply sector has also maintained rapid growth. According to preliminary calculations, the increase in the sectors regarding mining, electricity, thermal power, and gas has boosted the growth of industrial added value above designated size by around 1.4 percentage points.

Moreover, those measures and policies to help enterprises alleviate their difficulties have also played a positive role in stabilizing the industrial output. In the first quarter, enterprises' satisfaction with the preferential policies rose 2.7 percentage points compared with the fourth quarter of 2021, with their satisfaction with the tax and fee reduction policy surpassing 85%, according to the results of a survey of nearly 110,000 industrial enterprises above the designated size nationwide.

However, the growth of the production of the industrial enterprises above the designated size slowed down in March due to the growing impact of the pandemic, with their difficulties in production and operation being increased. Given the new situation and changes, we need to take the challenges seriously, and adopt proactive measures to address them. We should also bolster confidence, as the industrial production is generally stable with solid resilience, capable of withstanding the pressure, and maintaining stable performance.

Going forward, we will ensure the implementation of the support policies to promote industrial economic development. We will step up efforts to support the manufacturing sector and micro and small enterprises, and increase the support for those enterprises severely affected by the pandemic. We will also ensure the supply of energy and raw materials, stabilize the prices, maintain the stability of industrial and supply chains, and promote the stable and healthy development of the industrial sector. Thank you.

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China Daily:

Recently, due to the complex international environment and the sporadic COVID-19 outbreaks in China, the country's economy is also facing greater pressure. What do you think about this? In addition, what were the characteristics of the economic performance in the first quarter? What's your comment on this? Thank you.

Fu Linghui:

Thanks for your questions. China's economy has attracted much attention, especially the economic performance in the first quarter. Since the beginning of this year, the international situation has become more complex and severe, and the country has seen multiple, sporadic COVID-19 outbreaks at home, which have made greater impact on economic performance. Faced with the complex situation, all localities and government departments have thoroughly implemented the decisions and plans of the CPC Central Committee and the State Council, insisted on seeking progress while maintaining stability, focused on stabilizing the macroeconomic market, and effectively responded to risks and challenges. The national economy continued to recover, and got off to a steady start. This was mainly reflected in the following aspects.

First, the main macro indicators remained within a reasonable range. From the perspective of growth, the economy continues to maintain a momentum of expansion. In the first quarter, the GDP increased 4.8% year on year, 0.8 percentage point higher than that in the fourth quarter of the previous year, and the month-on-month growth rate was 1.3%. In terms of employment, despite the impact of the pandemic, the country's surveyed unemployment rate in urban areas increased in March, but in general, the overall stable employment situation has not changed. In the first quarter, the national urban surveyed unemployment rate stood at 5.5%, basically the same as the first quarter of last year. In terms of commodity prices, the supply of goods and services in the market was generally sufficient, and consumer prices rose moderately. In the first quarter, consumer prices rose 1.1% year on year. In terms of the balance of payments, the trade surplus in goods expanded, the trade deficit in services narrowed, foreign exchange reserves remained stable at around $3.2 trillion, and the balance of payments remained stable.

Second, industrial and agricultural production was generally stable. Spring plowing and preparation for plowing were carried out in an orderly manner, and animal husbandry production grew steadily. The agricultural situation remained steady. In the first quarter, the added value of agriculture, forestry, animal husbandry, and fishery industries increased 6.1% year on year, the meat output including pork, beef, lamb and poultry increased 8.8%, and the industrial production grew rapidly. In the first quarter, the added value of industrial enterprises above designated size increased 6.5% year on year, among which the equipment manufacturing industry saw a year-on-year growth of 8.1%.

Third, the trend of innovative development continued. New industries continue to grow. In the first quarter, the added value of the high-tech manufacturing industry increased 14.2% year on year, and the added value of the information transmission, software, and information technology service industry increased 10.8%, both maintaining rapid growth. New business forms and models continued to grow strong. In the first quarter, the online retail sales of physical goods increased 8.8% year on year, maintaining growth from an already high number and accounting for 23.2% of the total retail sales of consumer goods.

Fourth, the economic structure has been adjusted and optimized. The proportion of the manufacturing industry continued to increase. In the first quarter, the added value of the manufacturing industry increased 6.1% year on year. It accounted for 28.9% of the GDP, 1.3 percentage points higher than the same period last year. The leading role of consumption is obvious. In the first quarter, the contribution rate of final consumption expenditure to economic growth was 69.4%, an increase of 18.7 percentage points over the same period last year and higher than the contribution rate of gross capital formation. The income ratio of urban and rural residents declined. In the first quarter, the per capita disposable income ratio of urban and rural residents was 2.39, down 0.04 from the same period of last year.

Fifth, green transformation kept steadily advancing. Green and low-carbon products grew rapidly. In the first quarter, the output of new energy vehicles and solar cells increased 140.8% and 24.3%, respectively. The proportion of clean energy consumption continued to rise. In the first quarter, the proportion of clean energy consumption, such as electricity generated by natural gas, water, nuclear, wind, and photovoltaics, increased 0.8 percentage point over the same period of the previous year. Energy consumption per unit of GDP continued to decline. In the first quarter, energy consumption per 10,000 yuan of GDP dropped 2.3% year on year.

Sixth, people's livelihood kept improving, and residents' income continued to grow. In the first quarter, the country's per capita disposable income increased 5.1% year on year in real terms. Specifically, the per capita disposable income of rural residents increased 6.3% in real terms, and the per capita disposable income of urban residents increased 4.2% in real terms. The income growth of rural residents continued to be faster than that of urban residents, and the basic living consumption of residents was guaranteed. In the first quarter, the added value of the consumer goods manufacturing industry increased 8.1% year on year, maintaining relatively rapid growth. The retail sales of commodities in grain, oil and food, and beverage commodities by enterprises above designated size increased 9.3% and 11.8%, respectively. Investment in the people's livelihood sector continued to increase. In the first quarter, investment in education and health increased 17.2% and 23.8%, respectively.

I want to point out that the global situation has become more complex since March. As the impact of the domestic epidemic continues, some unexpected factors have exceeded expectations. Some major indicators have seen slower increases, and the downward economic pressure has increased. However, the fundamentals of China's long-term positive economic growth have not changed, the continuous recovery of the economy has not changed, nor have the characteristics of great potential, sufficient resilience, and broad space in development. China is fully capable and well-placed to overcome difficulties and challenges and achieve sustainable and healthy economic development.

In the next stage, we will fully implement the spirit of the Central Economic Work Conference and the deployment of the government work report and scientifically coordinate epidemic prevention and control and economic and social development. We will make economic stability our top priority and seek progress while maintaining stability. We will put the steady growth in a more prominent position, intensify the execution of macro policies, pay close attention to the implementation of policies, and strive for early implementation and early results. We will effectively deal with prominent problems, stabilize the fundamentals of the economy, safeguard basic people's livelihood, keep the economy operating within a reasonable range, and continue to make new progress in promoting high-quality economic development.

Thank you.

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CNBC:

I have two questions. The first is about employment. The newly added jobs in the first quarter were fewer than in the same period last year. Have you analyzed the reasons behind the decrease? Can you introduce the employment prospects for people aged above 35? My second question is about production. Considering the recent epidemic prevention and control measures, some businesses owners are worried that their businesses could be affected if production does not resume in May. What is your evaluation of the impact of halting production on the economy? Thank you.

Fu Linghui:

Thank you for your questions. Your questions are mainly about employment and the impact of epidemic on production. Since the beginning of this year, the international landscape continues to face grave challenges, while domestically, the impact of the epidemic still persists. Both have resulted in rising pressure on employment. Against this backdrop, the employment-first policy continues to produce effects, and the efforts for easing businesses' difficulties have been intensifying. Overall employment therefore remains stable. In the first quarter, the average surveyed urban unemployment rate stood at 5.5%, 0.1 percentage point higher than the same period last year. The unemployment rate among those aged between 25 and 59, the majority of the labor market, stood at 4.9%, unchanged from the same period last year.

While analyzing monthly trends, the surveyed urban unemployment rate rose in January and February, mainly because more people wanted to seek new jobs around the Chinese New Year. Based on our past experience, as those jobseekers would usually find new positions around March, the surveyed urban unemployment rate would gradually fall. However, the epidemic resurgence since March of this year has posed challenges for some jobseekers, stopping them from participating in job fairs. Therefore, the surveyed urban unemployment rate continued to rise in March to 5.8%, 0.3 percentage point higher than that in February. This reflected the increasing difficulty in production and business operations as well as mounting pressure on employment.

Although faced with difficulties, China still has many favorable conditions for stabilizing employment. Policies and measures to coordinate epidemic control and economic and social development will continue to produce effects, and the adverse impacts of the epidemic will be gradually brought under control. This year, the Chinese government will further the scale of tax-and-fee reductions and provide more effective support to the real economy so as to help ease the difficulties of businesses and ensure job opportunities. The robust environment for starting businesses and engaging in innovation is conducive to increasing jobs. Meanwhile, we have provided better vocational skills training and improved policies for employment support to facilitate supply-demand matching in the job market.

In the next stage, we will make full use of those favorable conditions to coordinate epidemic prevention and control with economic and social development. We will strive to maintain stable employment by strengthening the employment-first policy, easing the burdens of businesses to stabilize and expand employment, keeping the operations of market entities stable, and maintaining job security. We'll do this especially by improving policies on employment support for key groups such as college graduates and rural migrant workers.

As for the second question regarding the impact of the epidemic on production, since the beginning of this year, and March in particular, due to the COVID-19 resurgence in some areas, face-to-face sectors, especially the face-to-face service sector, have faced grave challenges. Consumption in catering, hospitality, retail, transport, and tourism has declined, which has had a negative influence on the production of the sectors involved. In areas with more severe epidemic situations, enterprises have reduced or even halted production. Fettered transport and logistics services also impeded industrial production. Despite those problems and pressure, we must see that there are favorable conditions for the Chinese economy to continue to recover.

First, the country's economy enjoys strong resilience, and the fundamentals sustaining its long-term economic growth remain unchanged, as does its economic recovery trajectory. China has a full-fledged industrial system, ever-improving infrastructure, and a super-sized domestic market. Efforts to promote innovation-driven development are paying off. All of these have laid a sound foundation for promoting sustained and healthy economic growth.

Second, the country has the requisite conditions to contain the epidemic in a scientific manner. Since the epidemic outbreak, China has conducted science-based and targeted prevention and control and developed a string of effective measures which agree with the actual conditions to ensure overall economic and social stability. Since the beginning of this year, the transmission of coronavirus has demonstrated new traits. However, as long as we stick to science-based prevention and control, we will gradually halt the spread of the epidemic and lower the negative impact of the epidemic on economic and social development.

Third, the country has rolled out a series of supportive policies. Since the beginning of this year, all local authorities and government departments have made economic stability our top priority, pursuing progress while ensuring stability and proactively introducing pro-stability policies. We will take further steps to cut taxes and fees, and tax and fee reductions this year are expected to reach 2.5 trillion yuan. In the face of the complex situation, we will further strengthen macro policies and encourage the financial sector to provide more effective support to the real economy. The People's Bank of China recently announced it would lower required reserve ratios to reduce financing costs of businesses, which will help enterprises resolve difficulties and promote stable economic performance.

In the next stage, we will continue to promote economic recovery by responding to the COVID-19 epidemic and pursuing economic and social development in a well-coordinated way. We will put into effect all measures for routine epidemic prevention and control and ensure that policies that have been introduced are implemented and deliver results at an early date. We will continue to expand domestic demand, help enterprises ease their difficulties, and ensure people's basic living needs. Thank you.

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Hong Kong Bauhinia Magazine:

Since the start of this year, global commodity prices have stayed firm. What does the NBS predict for the trend of this year's commodity prices? Thank you.

Fu Linghui:

Thanks for your question. Since the start of this year, the international situation has been undergoing multiple changes, and global commodity prices have soared to a new high. According to the statistics of the World Bank, in March, the global energy price index rose 24.1% month-on-month, and the non-energy price index increased 8.1% month-on-month, resulting in the general index reaching a new high in recent years.

Global commodity prices may remain high in the next stage and are prone to fluctuations. From the point of supply, Russia is a major country exporting energy, grains, and chemical fertilizers, while Ukraine's corn and wheat export account for a larger global share. The geopolitical conflict between Russia and Ukraine will lead to a decline in the output of related products and an increase in export controls, which will affect the global commodity supply. From the perspective of demand, the sustained recovery of the global economy will support the growth of commodity demand. However, amid expectations of a supply shortage, the hoarding demand of some commodity importers has increased, exacerbating the imbalance between supply and demand. Meanwhile, the geopolitical conflict has led to the sanction and anti-sanction practices between some countries and affected the efficiency of the global supply chain. Due to these factors, commodities' transportation and transaction costs have increased, putting further upward pressure on prices.

Therefore, against the backdrop of a tightening supply-demand relationship and increasing uncertainties in the global commodity market, high prices prone to fluctuations will be more likely to be witnessed.

Thank you.

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Bloomberg:

My question is about industrial output. Crude steel output in the first quarter fell 10.5%, cement fell 12.1%, and yet fixed asset investment (FAI) rose 9.3%. How do you explain the difference, or the massive divergence, between the collapse in industrial output for these products that are used for investment but the continued rise in investment? Thank you.

Fu Linghui:

Thank you for your question. More attention has been paid to the date this year. In general, with the development of China's economy in recent years, which is changing to high-quality development from the high-speed growth, we can see new changes in the driving force of economic growth compared with the past. In industrial production, we have seen that high-tech manufacturing and equipment manufacturing have maintained rapid growth, offering increased support for industry . In industrial investment, high-tech and equipment manufacturing investment has also maintained rapid growth. Therefore, the mode driving economic growth through industrialization and urbanization has changed dramatically compared with the past. You just mentioned that the output of crude steel and cement has dropped. However, industrial production has maintained rapid growth mainly due to the change of driving force of economic development. Now, the industrial sector is moving towards medium and high-end in the value chain. This year, among the three major investment areas, the manufacturing investment has seen a rapid increase, significantly driving the development of traditional industrial products, such as steel and cement. We should treat it objectively and conduct conscientious analyses to draw an accurate conclusion about such an economic phenomenon. Thank you.

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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.

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Cover News:

As of this year, sales in the real estate sector have declined, but the real estate investment has registered a certain amount of growth. What is your opinion on that? What do you expect the future real estate market to look like? Thank you.

Fu Linghui:

Thank you for your questions. People are concerned about the real estate market, and there has been much discussion on the recent changes of real estate indexes. According to historical records, in general, the growth of real estate investment is directly proportional to that of sales in commercial buildings, but the change in growth of real estate investment is markedly less than that of the commercial building sales. That is because once the construction of a real estate project begins, real estate companies continue construction to ensure they get their money back from the project's sales, and thus real estate investment is more stable than the sales. Therefore, even though market sales are sluggish and declining, it is still possible for real estate investment to maintain certain growth, as was the case in 2012, 2014, and 2015.

In the first quarter of 2022, the investment in real estate development increased by 0.7% year on year, but sales of commercial buildings by floor area declined by 13.8%, and sales volume by 22.7%. Therefore, real estate investment continued to increase while sales decreased. That was mainly due to the following reasons.

First, the effect of relevant policies, such as ensuring delivery. Since the end of 2021, all regions have stuck to the policy of “ensuring delivery, people's basic living needs, and stability,” promoted the resumption of real estate projects previously halted or delayed, and advanced the construction of ongoing projects. In the first quarter, real estate projects with a construction period lasting more than one year saw a rate of investment growth exceeding 10%. With the advancement of real estate projects, in the first quarter, investment in building installation projects in real estate development grew by 0.9% year on year, driving the growth of real estate investment by more than a 0.5 percentage point.

Second, the impact of counting in land purchase expenses. Earlier land purchase expenses are gradually counted into the investment of real estate development while construction of real estate projects advances, which partly accounts for the growth of real estate investment. In the first quarter, land purchase expenses grew by 0.6% year on year, increasing the real estate development investment by more than a 0.1 percentage point.

We should also notice that although the sales of real estate dropped, the sales volume of real estate still exceeded the total investment in the real estate market, and so sales could still support the investment to some extent. Meanwhile, the growth of real estate investment was influenced by prices. Since 2022, prices of construction materials and project installation fees have increased substantially, which drove the nominal increase in the real estate investment to some extent.

As for the real estate sector's prospects, though real estate sales are declining, as many regions moderately release restrictions on house purchases, lower thresholds for using housing funds, and accelerate approvals of loans for purchasing houses, the housing demands of some cities are released, and the decline of sales by floor area slows.

Going forward, all regions will stick to the principle that houses are for living in, not for speculation, and continue to stabilize land prices, housing prices, and expectations. The long-term mechanism of the real estate market will be improved to meet reasonable housing demands, and the declining sales of commercial buildings in China is likely to be moderated. With the improvement of the long-term rental market and the accelerated development of government-subsidized housing, the real estate market is expected to be gradually stabilized. Thank you.

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Hong Kong Economic Herald:

We recently noted that the Guideline of the CPC Central Committee and the State Council on Accelerating the Establishment of a Unified Domestic Market was released. How should we understand the unified domestic market? In what aspects shall we build the market? Thanks.

Fu Linghui:

Thank you for your questions. The Guideline of the CPC Central Committee and the State Council on Accelerating the Establishment of a Unified Domestic Market was officially released. The guideline stipulates the acceleration of the development of mechanisms and rules for the unified national market, the breaking of local protectionism and market division, and the unblocking of key sticking points restricting economic circulation in order to promote the smooth movement of commercial goods as a production factor in a larger scale. It also stipulates that we should speed up the construction of an efficient and standardized unified domestic market featuring fair competition and sufficient opening-up, and comprehensively advance our domestic market to transform from growing bigger to stronger in a bid to provide a solid support for building a high-standard market system and a high-standard socialist market economy. All these will promote the improvement of relevant systems and advance high-quality economic development.

First, the building of a unified domestic market is the shoring of the foundation and internal requirement of fostering the new development pattern. As China's economy has entered a high-quality development stage, in the face of the profound and complex changes in the international environment and the unbalanced and inadequate development inside of China, in order to realize the sustainable and sound economic growth, we have to implement the new development philosophy and accelerate the fostering of a double development dynamic, with the domestic economy and international engagement reinforcing each other, and the former as the mainstay. To promote the development of the domestic economy is inseparable from the building and improving of a unified domestic market. Only by accelerating the building of an efficient and normative unified domestic market can we promote the smooth flow of factors and resources and make the domestic economy more dynamic.

Second, the building of a unified domestic market is conducive to creating a stable, fair, transparent, and predictable business environment. In recent years, China has deeply implemented reforms to streamline administration and delegate power, improve regulation, and upgrade services, as well as actively built a market-orientated, law-based, and internationalized business environment. These efforts have provided a sound ecology for various types of market entities to invest and foster businesses, increased the number of market entities, injected vitality into the market, promoted the employment, and accelerated the development. In the next step, with the building of a unified domestic market and further improvement of the fair, transparent, and predictable business environment, we will further stimulate the potential of entrepreneurship and innovation, create more high-quality jobs, and promote the emergence of new industries and models in a bid to inject strong vitality into China's development.

Third, the building of a unified domestic market is beneficial for promoting scientific and technological innovation and industrial upgrading. With a population of 1.4 billion, China has a distinctive advantage in utilizing its huge market. Building a unified domestic market, ensuring the decisive role of the market in resource allocation and allowing market demand to lead the efficient allocation of innovative resources and orderly flow and reasonable allocation of innovative factors, will encourage innovation, optimize the division of labor, promote competition, boost enterprises' willingness and capabilities to partake in scientific and technological innovation, promote the vigorous development of emerging industries, and encourage companies to go big. This is all in a bid to accelerate the reforms in quality, efficiency, and driving forces and provide strong support for China's high-quality economic development.

Meanwhile, the building of a unified domestic market will be helpful in further reducing market transaction costs and fostering new advantages in engaging with international competition and cooperation.

In the next step, we will earnestly implement the guideline on accelerating the establishment of a unified domestic market, which was jointly released by the Communist Party of China Central Committee and the State Council. We will strengthen the unification of basic market systems and rules, increase high-standard connectivity among market facilities, build a unified factor and resource market, promote high-standard unification between the commodity and service markets, advance fairness and unification in market regulation, and regulate inappropriate competition and acts of market intervention in a bid to accelerate the formation of a high-standard market system and promote sustainable and sound economic development.

Thank you.

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Reuters:

In the face of downward economic pressure, especially in April, as more cities have tightened anti-pandemic management and control while prices continue to increase, will there be rising stagflation risks? In addition, could you please provide the contribution statistics of the capital formation to as well as imports and exports to the economic growth in the first quarter? Thank you.

Fu Linghui:

I will answer the second question first. Regarding the contributions of the three key demands to economic growth, in the first quarter, the final consumption expenditure contributed 69.4% to GDP and added 3.3 percentage points to GDP growth; the capital formation contributed 26.9% to GDP and added 1.3 percentage points to GDP growth; net exports of goods and services contributed 3.7% to GDP and added 0.2 percentage points to GDP growth.

Regarding the issues of growth and prices that you are concerned about, I introduced the growth previously. Generally speaking, stable economic recovery and growth will be sustained. I would like to respond to the issue of prices. Since the beginning of this year, the price of global bulk commodities has continued to increase, enlarging its impact on our domestic prices. However, in general, China's strong market supply capacities for goods and services have laid a favorable foundation for stabilizing prices. Since the beginning of this year, consumer prices have increased modestly. In the first quarter, CPI increased by 1.1% compared with the same period of last year, slightly higher than that of the first two months. Meanwhile, core CPI increased by 1.2% on a yearly basis, flat with that of the first two months. The rise of CPI in March has slightly expanded as it increased by 1.5% compared with last March and 0.6 percentage points higher than that of February. Among this, the core CPI in March increased by 1.1% compared with last March, equal to that of February. Generally speaking, it demonstrates the following characteristics.

First, the year-on-year decrease of food prices has narrowed. In March, food prices decreased by 1.5% year on year, narrowing by 2.4 percentage points from the previous month's decrease. Among this, the price of pork fell by 41.4%, 1.1 percentage points lower than that of the previous month.

Second, the increase of industrial consumables has expanded. In March, the prices of industrial consumables increased by 3.5% year on year, 0.4 percentage points higher than that of the previous month.

Third, the increase in service prices has slightly decreased. In March, service prices increased by 1.1% year on year, 0.1 percentage points lower than that of the previous month.

The expanding growth rate of CPI in March is mainly attributed to the rising prices of vegetables and energy. Due to the pandemic and the weather, vegetable prices saw a year-on-year increase of 17.2% in March from a year-on-year decrease of 0.1% in the previous month. Domestic energy prices increased by 13.4% compared with the same period of last year, 1 percentage point higher than that of the previous month. The two factors added 1.32 percentage points to the growth of CPI, accounting for nearly 90% of the total increase of CPI.

Judging from the trend, despite the international imported factors and supply pressures of some fresh food in the short term, there are many favorable conditions for the CPI to maintain a moderate rise. In terms of demand, consumption and investment demand are still recovering, with limited influence on driving the price. From the perspective of supply, grain production has scored consecutive bumper harvests, and stocks are abundant; the production capacity of live pigs has generally recovered, the supply of pork is generally sufficient, and prices are still falling. This is because the supply capacity of China's commodity and service market is relatively sufficient. In March, the cost of industrial consumer goods excluding energy was relatively low; the price of services rose by 1.1% year-on-year, and the increase was a 0.1 percentage point lower than the previous month. Meanwhile, the measures to ensure market supply and stabilize prices will continue to be effective, which is also conducive to keeping prices stable. Therefore, there are foundations and conditions for prices to maintain a generally stable and moderate upward trend. Thank you.

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Shou Xiaoli:

Due to limited time, the last question, please.

The Beijing News:

Since the beginning of this year, the global energy and food supply have been tight under the influence of the international situation. What is the current condition of energy production and agricultural production in China? Can we meet market needs in the next stage? Thank you.

Fu Linghui:

Thanks for your questions. The international situation has undergone significant changes this year, which have had a major impact on global food and energy production and supply. In general, domestic food production and energy supply are generally stable. In recent years, China has attached great importance to agricultural development. It has introduced a series of measures to encourage and support agricultural development, speed up the protection of cultivated land, promote the construction of high-standard farmland, give play to the role of agricultural technologies, and promote the increase of grain production and harvest. Positive results have been achieved as a result. China's grain production has been more than 1.3 trillion jin (650 billion kg) for seven consecutive years, and live pig production has also returned to the level of normal years.

This year, agricultural production has remained generally stable. In the first quarter, the added value of the primary industry increased by 6% year-on-year, maintaining rapid growth. Regarding the planting industry, the total output value increased by 4.8% in the first quarter. Affected by the severe flood last autumn, the winter wheat planting season in some areas was significantly prolonged. The winter wheat planting area was stable and slightly decreased, and the seedlings were weak. Since the spring of this year, the climate in the main winter wheat-producing regions has been generally favorable. All localities have stepped up efforts to do an excellent job in farmland management, and the seedling situation has gradually improved. At the same time, the northwest region is also actively expanding the planting area of spring wheat, and the total planting area of the wheat is basically the same. Regarding livestock farming, the production remained stable. In the first quarter, the total output value of livestock farming increased by 8% year-on-year, and the output of beef, mutton, and poultry increased by 8.8% compared with the same period of the previous year.

For the next stage, the stability of food production can be guaranteed.

First, we will see responsibilities are fulfilled by all stakeholders at all levels and ensure the equal responsibility of the Party and government for grain production. The production areas and output should be ensured in all main producing and marketing areas,, and areas with a balance between production and marketing. We will strengthen the management of arable land and ensure stable grain production.

Second, we will scale up support for food production. The minimum purchase price for rice and wheat will be increased, subsidies for corn and soybean producers and rice subsidies will continue to be stabilized, and a 20-billion-yuan subsidy for agricultural materials will be issued to mobilize farmers' enthusiasm for growing grain.

Third, we will improve planting efficiency. Since 2021, grain prices have remained stable and risen slightly, farmers' income from grain cultivation has increased, and their willingness to plant has increased. But, of course, we must also see that the cost of growing grain has risen, and there are uncertainties such as meteorological disasters, diseases, and insect pests. Therefore, we still need to do an excellent job in grain production to ensure food security.

Regarding energy, energy production has also remained generally stable this year. In the first quarter, the output of major energy products such as coal, gas, and electricity continued to grow, and China's energy supply was generally stable.

First, raw coal production maintained rapid growth. Coal production enterprises have thoroughly implemented the task of increasing coal production and ensuring supply, accelerating the release of high-quality coal production capacity, and effectively increasing coal supply. In the first quarter, the output of raw coal of industrial enterprises above the designated size reached 1.08 billion tons, a year-on-year increase of 10.3%.

Second, oil and gas production grew steadily. We have stepped up efforts in increasing storage and production capacity. In the first quarter, crude oil production of industrial enterprises above the designated size increased by 4.4% year-on-year, and natural gas production increased by 6.6% year-on-year.

Third, electricity production continued to grow. In the first quarter, power generated by industrial enterprises above the designated size increased by 3.1% year-on-year, of which clean energy power increased by 8.3% year-on-year, driving the growth of power production in industrial enterprises above the designated size by 2.1 percentage points.

Influenced by geopolitical conflicts, recently, the price of international energy commodities rose rapidly, the instability of the global energy market increased, and China's energy security is under certain pressure. Still, we have the conditions, capabilities, and methods to ensure a safe, reliable and stable supply of energy. Therefore, in the next stage, in accordance with the decisions and deployments of the Party Central Committee and the State Council, we will further implement the policies and measures that have been introduced to ensure energy supply and price stability, actively increase the supply of major energy products such as coal, oil, gas, and electricity, actively respond to the risks brought about by rising international energy prices, and resolutely meet basic living needs of people in energy consumption, and ensure the safe and stable supply of energy and the stable and healthy development of the economy and society. Thank you.

Shou Xiaoli:

Thank you, Mr. Fu, and friends from the press. That's all for today's press conference.

Translated and edited by Xu Xiaoxuan, Ma Yujia, Gong Yingchun, Liu Sitong, Zhang Rui, Wang Wei, Zhou Jing, Li Huiru, Yuan Fang, Liu Jianing, Qin Qi, Wang Yiming, Zhang Junmian, Wang Qian, Zhu Bochen, Yang Xi, Huang Shan, David Ball, Jay Birbeck and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.