Since the beginning of this year, in the face of complicated and severe domestic and international situations, all regions and departments, following the decisions and arrangements of the CPC Central Committee and the State Council, have firmly established the new idea of development, and actively adapted to and led the new normal. They have followed the general principle of making progress while working to keep performance stable, boosted the supply-side structural reform unswervingly, expanded aggregate demand moderately, and fostered new drivers of growth at a higher speed. China's national economy has achieved a stable performance on the whole while securing better-than-expected high quality progress. The GDP registered a year-on-year increase of 6.7% in the first three quarters, each of which saw growth of 6.7%, showing economic growth is increasingly stable.
From the perspective of production, the rapid development of service industries has played an important role in the stable economic growth
From the perspective of production, the service sector developed steadily and steadily, the industry gradually stabilized, and the agriculture accelerated quarter by quarter. The rapid development of the service sector played a key role in the stable economic growth. In the first, second and third quarters, the added value of the tertiary industry grew by 7.6%, 7.5% and 7.6%, respectively, and maintained steady and rapid development on the whole. The added value of the secondary industry increased by 5.9%, 6.3% and 6.1%, respectively. The decline in the secondary industry in the third quarter was attributable mainly to the slowing growth in the construction industry caused by slowdown in growth of fixed assets investment, while the added value of industries above designated size increased by 5.8%, 6.1% and 6.1%, respectively. Industrial electricity consumption, electric energy generation, freight volume and other physical indicators improved in the third quarter, representing a prominent stabilizing trend. The added value of the primary industry increased by 2.9%, 3.1% and 4.0%, respectively, indicating accelerated growth quarter by quarter. From the perspective of structural changes in the three industries in each quarter, comparing the second quarter with the first quarter, although the primary industry and the secondary industry both achieved growth in the industrial added value, a slight slowdown in the growth of the service sector occurred. Comparing the third quarter with the second quarter, although the primary industry and the tertiary industry both realized growth in the industrial added value, the secondary industry exhibited slowing growth, so the year-on-year growth in GDP remained the same in the first three quarters. From the perspective of contribution of economic growth, in the first quarter, the first half and the first three quarters of the year, the tertiary industry contributed 62.6%, 59.7% and 58.5% to the economic growth, respectively, the secondary industry 35.1%, 37.4% and 37.4%, respectively, and the primary industry 2.3%, 2.9% and 4.1%, respectively. As the development of the service sector is often more stable than the industry, the stability of economic operation will improve under the condition that the service sector maintains high and stable contribution to economic growth.
From the perspective of three major demands, consumption demand serves as a main driving force that promotes stable economic growth
From the perspective of three major demands, consumption grew stably and rapidly, investment slowed down and stabilized, and export improved. Consumption demand serves as a main driving force that promotes stable economic growth. In the first three quarters, the total retail sales of social consumer goods grew by 10.4% over the same period last year, 0.1 percentage points higher than growth in the first half of the year and in the first quarter. Among the social consumer goods, automobile and housing-related goods were sold well, playing an important role in maintaining rapid growth of consumption. In the first three quarters, the retail sales of automobile products of enterprises above designated size rose by 9.1% on a year-on-year basis, 1.4 percentage points higher than growth in the first half of the year; and household appliances and audio-video equipment achieved growth which was 0.6 percentage points higher than growth in the first half of the year. Investment in fixed assets slowed down and stabilized. In the first three quarters, investment in fixed assets (excluding farmers) grew by 8.2% on a year-on-year basis, 0.8 percentage points and 2.5 percentage points lower than growth in the first half of the year and the first quarter, respectively, but 0.1 percentage points higher than growth in the first eight months. August and September saw investment growth of 8.2% and 9.0%, respectively, exhibiting accelerated growth for two consecutive months. Decline in import and export narrowed. In the first three quarters, the total volume of import and export nationwide (denominated in RMB) fell by 1.9% on a year-on-year basis, 1.4 and 4.0 percentage points lower than decline in the first half of the year and the first quarter, respectively. Specifically, export fell by 1.6%, 0.5 percentage points lower than decline in the first half of the year; import fell by 2.3%, 2.4 percentage points lower. From the perspective of structural changes in the three major demands, despite slowing growth in investment, growth in consumption remained stable and rose slightly. Decline in export narrowed and positive growth in export was achieved in the third quarter. As a result, the year-on-year growth in GDP remained the same in the first three quarters. From the perspective of contribution to economic growth, in the first quarter, the first half and the first three quarters of the year, final consumption expenditure respectively contributed 83.7%, 73.4% and 71% to economic growth, capital formation 36.6%, 37% and 36.8%, respectively, and net export of goods and services -20.3%, -10.4% and -7.8%, respectively. Final consumption expenditure was the most important contributor to economic growth. Consumption itself has strong stability and stickiness, enhancing the stability of economic growth.
From the perspective of transition of growth drivers, the new economy and new drivers flourish, and traditional drivers are adjusted and transformed
From the perspective of transition of growth drivers, the new economy and new drivers flourish, and traditional drivers are adjusted and transformed, playing a crucial role in the stable economic growth. This year, the reform of business system was accelerated again. The reform of the registration system featuring "five in one and one code for one license" was accelerated and fully implemented. The entrepreneurship and innovation program made steady progress. Local governments sped up the establishment of "crowd innovation, crowdsourcing, crowd support, and crowdfunding" platforms and business incubators, and promoted the effective integration of talents, technologies, capital and other innovative elements. The entrepreneurship and innovation in the entire society demonstrate a good momentum of vigorous development. In the first three quarters, there were 4.01 million newly registered enterprises, an increase of 27% over the same period last year, and the average daily new registration reported 14,600 enterprises, significantly higher than the previous two years. Newly registered enterprises created a large number of jobs to accommodate surplus personnel arising from cutting production overcapacity and made significant contributions to the stabilization of employment. In the first three quarters, 10.67 million people were newly employed in urban areas nationwide, achieving the annual target one quarter ahead of schedule. According to a survey conducted in 31 large cities in September, the urban unemployment rate was lower than 5% for the first time since June 2013. Employment stability is an important indicator of economic stability, because stable employment leads to stable income, stable consumer consumption capacities and expectations, and even stable economic fundamentals of China. In the surge of entrepreneurship and innovation, China witnessed rapid growth of new industries and new products, and constant emergence of new models and new services. In the wake of economic development, "new elements" sprung up from the old elements and thrived in innovation, slowing down the influence of traditional industries. In the first three quarters, strategic emerging industries grew by 10.8% over the same period last year, 4.8 percentage points higher than that of industries above designated size. Online retail sales increased by 25.1%, 14.7 percentage points higher than the total retail sales of social consumer goods. From January to August, strategic emerging service industries achieved operating revenue growth of 15.3%, 5.2 percentage points higher than that of service industries above designated size. In addition, the CPC Central Committee and the State Council actively and steadily did a good job in cutting production overcapacity, and all local governments took active actions to find ways and solutions. Doing "subtraction" was accompanied by speeding up structural adjustment and industrial configuration and arranging personnel through multiple channels. Overall, the economy did not exhibit ups and downs, with the thriving new economy, elimination of backward production facilities, and smooth transition from old drivers to new ones.
From the perspective of the supply-demand relationship, the actual GDP growth in real terms remains stable
From the perspective of the supply-demand relationship, the nominal GDP growth and GDP deflator increased quarter by quarter, and the actual GDP growth in real terms remained stable. This year saw a basically stable consumer price index (CPI) which registered year-on-year growth of 2.0% in the first three quarters, almost equal to the growth of 2.1% in the first half of the year. The core CPI that excludes food and energy reported a monthly year-on-year increase of about 1.6%, representing a smaller fluctuation. Looking at the sector of industrial products, as a result of the supply-side structural reform, especially the positive spillover effect brought about by cutting production overcapacity and depleting stocks, as well as the recovery of the international commodity market, the contradiction between market supply and demand was eased, and the producer price index (PPI) exhibited positive changes. This year, the year-on-year decline in PPI continuously narrowed, and this September saw a change from decline to increase by 0.1% over the same period last year, bringing to an end the trend of year-on-year decline for 54 months in a row. Amid the stable CPI and significant increase in PPI, the GDP deflator reflecting aggregate social supply and demand increased quarter by quarter, reporting 0.4%, 0.6% and 1.1% in Q1, Q2 and Q3, respectively. The sales revenue and corporate profits calculated at current prices improved markedly, and GDP growth accelerated quarter by quarter, reporting 7.1%, 7.3% and 7.8% in Q1, Q2 and Q3, respectively. Enterprises and other market players operated with less pressure in an improving market environment. In fact, however, GDP growth was calculated at constant prices, so the actual growth in real terms did not change a lot in each quarter.
From the perspective of macro-control, the government has created a healthy environment for stable economic growth
From the perspective of macro-control, the government is more capable of controlling complicated situations and creates a healthy environment for stable economic growth. In recent years, in the face of complicated and severe domestic and international situations, the CPC Central Committee and the State Council, by virtue of unified focus and overall planning, adhered to the general principle of making progress while working to keep performance stable, implemented the proactive fiscal policy and prudent monetary policy, and maintained policy continuity and stability, thereby guaranteeing that China's economy has sailed towards the established goal. China's economy has been able to withstand the downward pressure and grow stably by relying on reform and opening up, actively innovating the macro-control approach, vigorously boosting the supply-side structural reform, and accelerating the transition of old drivers of economic growth to new ones, rather than relying on strong stimulus by "flooding". Especially since this year, a relaxed environment has been created for the supply-side structural reform through a combination of policies featuring expanding aggregate demand moderately, boosting the supply-side structural reform unswervingly, and guiding an expectation of sound development, together with the use of stable macroeconomic policies to stabilize social expectations. Five tasks of depleting stocks, cutting production overcapacity, deleveraging, reducing costs and bolstering weak spots were taken to improve market supply and demand and enhance confidence in development. In addition, the State Council carried out overall inspection, promoted specific inspection of private investment, and accelerated the implementation of major policy initiatives, key investment projects and important livelihood projects. Considering current situations and eyeing long-term development, these policy initiatives are aimed at fostering new drivers and transforming traditional drivers, effectively boosting the stable growth, transformation and upgrading of China's economy.
Overall, as a result of the above-mentioned factors, China's economy has exhibited significantly increased stability. In particular, although each of the first three quarters objectively saw economic growth of 6.7%, the internal structure of economy underwent profound, positive changes, with the quality and efficiency being improved greatly. A qualitative transition is taking shape under the general trend of stable economic growth. However, it is important to be clearly aware that amid the current complicated environments at home and abroad, there are quite a few uncertain and unstable factors, as evident by the contradiction between bleak domestic demand and overcapacity, the heavy tasks of transformation, upgrading and transition of growth drivers, the large economic downward pressure, and the unstable foundation for the stable operation of the economy, all of which require close attention. In the next stage, it is necessary to not only strengthen the confidence and maintain unified focus, but also focus on long-term development with bottom-line thinking. We should adhere to the new idea of development to lead the new normal; expand aggregate demand moderately; boost the supply-side structural reform unswervingly; enhance confidence in development; promote the implementation of policies and reform vigorously; deal with the relationship between the government and the market better; give full play to the decisive role of the market in allocating resources; strive to drive economic transformation and upgrading; focus on accelerating innovation-driven development; consolidate and expand the positive changes; and fuel the sustained, stable and healthy development of the national economy.