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Irreversible Trend of Stable and Sound Development of the Chinese Economy

Submit Time:26-06-2017 | Zoom In | Zoom Out

Author: | Source:People's Daily

Abstract:

  In April, growth of some economic indicators slowed down, causing some people to worry about the sustainability of the stable and sound development of economy. In fact, short-term fluctuations in economic data are normal, and non-economic factors such as the comparison base year and the change in working days are all likely to lead to changes in year-on-year growth. Therefore, determining the economic performance hinges on not only the growth rate and its matching with employment, prices, income and other indicators, but also the quality, structure, momentum and space. Through comprehensive analysis, the Chinese economy has operated within a reasonable range since this year, and there are more factors that support the Chinese economy to maintain growth at medium and high speed and march toward the medium-high end, including positive changes such as quality improvement, structural optimization, momentum enhancement, driver growth and space expansion. China has embarked on a more robust path of stable and sound development.

  Employment expansion, price stability and income increase enhanced the quality of economic growth

  According to the five macroeconomic indicators, this year saw a good landscape of China's economic performance, as evident by a rebound in growth, employment expansion, price stability, increase in residents' income, and improved balance of payments. Economic growth rose steadily. In the first quarter, GDP grew by 6.9% year on year, up 0.2 percentage point over the same period last year, and up 0.1 percentage point over the fourth quarter of last year. Economic growth remained between 6.7% and 6.9% for seven quarters in a row and got increasingly stable. Employment was stable and good. From January to April, 4.65 million people were newly employed in urban areas nationwide, an increase of 220,000 over the same period last year. In April, the surveyed unemployment rate of cities was about 5%, and the surveyed unemployment rate of 31 large cities was about 4.9%, both of which were lower than those in the previous month and the same month last year. Prices rose moderately. From January to April, the consumer price index (CPI) rose by 1.4% year on year, down 0.8 percentage point over the same period last year. The core CPI excluding food and energy rose by 2.1%, exhibiting a moderate rising trend. Residents' income maintained stable growth. In the first quarter, the per capita disposable income of residents across the country increased by 7.0% year on year, up 0.5 percentage point and 0.7 percentage point over the same period last year and over last year, respectively, and 0.1 percentage point faster than the GDP growth. The balance of payments improved. China's import and export of goods made stable and sound progress, surplus continued in the current accounts of comprehensive trade in goods and trade in services, and the exchange rate of renminbi and the foreign exchange reserves stabilized on the whole. At the end of April, the central parity of renminbi against the U.S. dollar was 6.8931, up 0.09% over the end of last month; the balance of foreign exchange reserves was 3.0295 trillion U.S. dollars, up 20.4 billion U.S. dollars over the end of March, rebounding for three consecutive months. These circumstances fully show that the Chinese economy has continued to run within a reasonable range, and the ability to guarantee people's livelihood and the people's sense of gain have improved significantly, leading to rising sustainability of economic development.

  Deepened supply-side structural reform, improved real economy, and optimized and upgraded industries consolidated the foundation of sustainable economic development

  This year, the five tasks of cutting production overcapacity, depleting stocks, deleveraging, reducing costs and bolstering weak spots have continued to make new progress. From January to April, 31.7 million tons of steel production capacity and 68.97 million tons of coal production capacity were removed. At the end of April, the area of commercial housing for sale fell by 7.2% year on year, up 0.8 percentage point over the end of March. At the end of March, the asset-liability ratio of industrial enterprises above designated size was 56.2%, down 0.7 percentage point year on year. In the first quarter, the cost per RMB 100 of main business income of industrial enterprises above designated size was RMB 85.25, down RMB 0.15 over the same period last year. From January to April, investment in such weak industries as ecological protection and environmental control, public facilities management, and water conservancy management increased by 50.4%, 28.4% and 16.1% year on year, respectively, significantly faster than the total investment growth. The five tasks made solid progress, promoting continuous improvement in the market supply-demand relationship and boosting constant enhancement in business conditions and expectations. From January to April, the producer price index (PPI) rose by 7.2% year on year, and among the surveyed 40 industrial categories, product prices of 34 industries increased, showing an expansion in the number of industries where product prices rose year on year. In the first quarter, the profits achieved by industrial enterprises above designated size increased by 28.3% year on year, up 20.9 percentage points over the same period last year. In April, the purchasing managers' index (PMI) of manufacturing was 51.2%, up 1.1 percentage points over the same period last year, falling in an expansion range for nine consecutive months; the business activity index of non-manufacturing was 54.0%, up 0.5 percentage point over the same period last year, remaining in a high prosperity range of 54.0% and above for seven consecutive months. In addition, the reforms of streamlining administration, delegating more powers to lower-level governments and to society in general while improving regulation, and optimizing services advanced in depth. The reforms in taxation, finance, price and other key areas and key links continued to be deepened. The pilot implementation of mixed ownership reform of the first group of state-owned enterprises proceeded steadily. The "Belt and Road" Summit Forum was successfully held, promoting China's opening up to a higher level. These measures reduced enterprises' institutional transaction costs, effectively optimized the market environment, enhanced the market vitality, encouraged transformation and development of enterprises, and reshaped our competitive advantage.

  Under the combined effect of these factors, the primary, secondary and tertiary industries have developed in adjustment and upgraded in transformation, thereby strengthening the foundation for stable economic development. Agricultural production was stable, and the production structure and regional layout became more reasonable. In the first quarter, the added value of the primary industry grew by 3.0% year on year, up 0.1 percentage point over the same period last year. The industrial economy rose steadily. From January to April, the added value of industries above designated size increased by 6.7% year on year, up 0.9 percentage point over the same period last year; industrial electricity consumption increased by 6.9%, up 6.7 percentage points over the same period last year; railway freight volume increased by 15.4%, down 7.9 percentage points over the same period last year. The service industry continued to develop rapidly. In April, the production index of the service industry rose by 8.1% year on year, and has remained at a high level of more than 8% this year. Tourism, sports, health, culture, old-age care and education & training industries thrived. In the primary, secondary and tertiary industries, the service industry has become the largest industry that underpins the national economy, dominating around half of the national economy, and it plays an increasingly stronger role in stabilizing economic development. In the first quarter, the added value of the tertiary industry accounted for 56.5% of GDP, 17.8 percentage points higher than that of the secondary industry; the service industry contributed 61.7% to economic growth, 25.6 percentage points higher the secondary industry, and became a major driver of economic growth.

  Consumption orientation, export acceleration and strong investment enhanced the momentum of economic development

       While intensifying industrial restructuring, the country has always adhered to the expansion of domestic demand as a strategic basis, explored the endogenous power of economic growth, and promoted the upgrading and transformation of demand structure, thus domestic demand has become the main driver of economic development. In the first quarter, domestic demand contributed as high as 95.8% to economic growth, 91.6 percentage points higher than overseas demand. Consumption's contribution to economic growth was prominent, and the consumption-driven economic development model came into being. In the first quarter, final consumption expenditure contributed 77.2% to economic growth, an increase of 2.2 percentage points over the same period last year and 58.6 percentage points higher than that of gross capital formation. Consumption growth rose steadily. From January to April, the total retail sales of social consumer goods across the country exceeded RMB 11 trillion, an increase of 10.2% year on year and 0.2 percentage point faster than that in the first quarter. In contrast, although investment growth was a little slow, structural optimization started to work. From January to April, investment in the high-tech industry and the service industry increased by 22.6% and 12.1% year on year, respectively, both of which were faster than the average growth of all investment, injecting a new impetus into advanced production capacity. In addition, fixed-asset investment in targeted weak industries such as ecological environmental protection, public facilities, water conservancy and transportation grew at a high speed, effectively alleviating the worries about economic development. Overseas demand grew stably. From January to April, national imports and exports grew by 20.3% and 14.7% year on year, respectively, both of which maintained double-digit growth. Consumption became the ballast that stabilized domestic demand, while overseas demand served as a booster of economic development. This pattern will continue to be consolidated in a certain period of the future. China is now in a key stage that sees the upgrading of consumption structure, and the steady growth of income and the in-depth advancement of new industrialization and urbanization will continue to release consumption and investment potential. The stable recovery of the world economy also created favorable conditions for foreign trade to grow steadily. In April, the China Export Leading Indicator was 40.7, 0.5 higher than that of the previous month, indicating that foreign trade will show a steady rise trend in the next stage.

  Accelerated industrialization of scientific and technological achievements, vigorous development of entrepreneurship and innovation, and rapid growth of new drivers stimulated the vitality of economic development

        This year saw the in-depth implementation of the innovation-driven development strategy. The leading role of innovation strengthened continuously; the pace of technological innovation accelerated; entrepreneurship and innovation flourished; new industries, new business types, new models, and new products continued to emerge and thrive, infusing a new impetus into sustained and healthy economic development. Special-funded projects of national science and technology were deployed and implemented at a faster pace. Top-down design of national laboratories was introduced. Industrialization of integrated circuits, artificial intelligence, and biotechnology accelerated significantly. Civil-military integration in marine, space, cyberspace and infrastructure proceeded steadily. Significant scientific and technological achievements were emerging. "Tianzhou 1" cargo spacecraft was launched and successfully docked with "Tiangong 2"; C919 with independent intellectual property rights completed its first flight successfully; the world's first optical quantum computer came out in China; China succeeded in the world's first attempt to exploit combustible ice, becoming the world's first country to achieve stable mining of marine super energy. Industrialization of scientific and technological achievements made prominent progress. In the first quarter, the added value of strategic emerging industries grew by 10.3% over the same period last year, 3.5 percentage points higher than that of industries above designated size. From January to April, the added value of high-tech industry and equipment manufacturing industry increased by 13.1% and 11.5% year on year, 6.4 and 4.8 percentage points higher than that of the industries above designated size, respectively; the added value of pharmaceutical manufacturing, electronic and communication equipment manufacturing, and medical equipment and instrumentation manufacturing increased by 11.3%, 15.9% and 11.6% year on year, respectively, all of which were faster than the that of the industries above designated size. Entrepreneurship and innovation had a good momentum. From January to April, there were 1.81 million newly registered enterprises across the country, an increase of 15.2% year on year, with 15,100 enterprises registered per day on average; there were 950,000 patent applications, an increase of 6.5% year on year. New business types and models flourished. The "Internet Plus" Action Plan accelerated online and offline integration, and the Internet economy represented by Internet sales and express delivery grew rapidly. From January to April, Internet retail sales of goods and services nationwide reached RMB 1.918 trillion, a year-on-year increase of 32%; where, the retail sales of goods totaled RMB 1.4618 trillion, an increase of 25.9%; the volume of express delivery reached 10.6 billion parcels, a year-on-year increase of 29.8%. New models such as Internet finance and mobile payment were emerging, gradually becoming new economic growth points. New products and new services grew rapidly. From January to April, the production of industrial robots grew by 51.7% year on year, sport utility vehicles (SUVs) 21.7%, solar cells 18.2%, and smartphones 10.9%. Tourism, culture, sports, health, old-age care and other wellbeing industries developed rapidly; sharing economy extended its reach to a wide range of areas; cross-border e-commerce, online health care, bicycle sharing and other new service models were emerging one after another. New drivers continued to build up and grow, helping us grasp the initiative of the future's industrial distribution and occupy the commanding heights of industrial development.

  Steady advancement of three strategies, sound interaction among four regions, and rise of new growth poles expanded the new space for economic development

  Under the guidance of new ideas, new thoughts and new strategies, the implementation of the "Belt and Road" Initiative, the Beijing-Tianjin-Hebei Integration Initiative, and the Yangtze Economic Belt Initiative was deepened; the four regions of East China, Central China, West China, and Northeast China experienced coordinated development; a new pattern of regional coordinated development took initial shape, featuring free flow of factors, effective constraints of subject functions, equality of basic public services, and appropriate carrying capacity of resources and environment. The three strategies proceeded in a coordinated manner. In the first quarter, China's imports from and exports to the countries situated along the "Belt and Road" increased by 26.2% year on year, 4.4 percentage points higher than that of all imports and exports. The non-financial direct investment in 43 "Belt and Road" countries amounted to 2.95 billion US dollars, accounting for 14.4% of the total amount of foreign investment over the same period last year, up 5.4 percentage points year on year. Beijing-Tianjin-Hebei coordinated development achieved new results. Xiong'an New Area was formally established, and the construction of Beijing's sub-center progressed smoothly. The role of the Yangtze River Economic Belt in supporting development enhanced. Downstream industries were transferred to middle-stream and upstream industries orderly; a reasonable and effective pattern of industrial division of labor gradually took shape. The "four regions" were engaged in sound interaction. The eastern region stood at the forefront in terms of transformation and upgrading as well as opening up and innovation, and played an increasingly prominent role in supporting and leading the national development. The central and western regions continued exert their late-mover advantages, and their main development indicators grew faster than those of the whole country. From January to April, the added value of industries above designated size in the central and western regions grew 1.2 and 1.0 percentage points faster than that of the whole country, respectively, and fixed asset investment in the central and western regions grew 1.4 and 2.1 percentage points faster than that of the whole country, respectively. The economic operation in the northeastern region stabilized. From January to April, the added value of industries above designated size in the northeastern region rose by 0.7% year on year, and it declined by 3.1% in the previous year; fixed asset investment (excluding farmers) fell by 18.7%, down 4.8 percentage points over the previous year. The coordinated development among different has allowed rational gradient transfer of industries, efficient allocation of resources and factors, and deepening of the division of labor, which helps transform the "potential energy" generated by the development gap among different regions into the "kinetic energy" for economic development, engender new growth poles and growth zones, and constantly expand the new space for economic development.

  In short, thanks to the combined measures of stabilizing the economic growth, promoting the reform, adjusting the economic structure, benefiting the people's livelihood and guarding against risks and latent dangers, the trend that the Chinese economy has run stably with steady and sound progress has not changed. The economic structure has been optimized in adjustment and drivers have been upgraded in transformation, leading to more prominent characteristics of the new normal of development. It is predicted that the Chinese economy will maintain medium-to-high speed growth throughout this year, and the expected objectives of development will be accomplished and achieve better results in the actual work. Looking forward to the future, China is still in an important stage filled with strategic opportunities. Thanks to our prominent late-mover advantages, long-term accumulation of a strong material basis, and accelerated formation of new growth drivers, the Chinese economy has a more flexible room and great potential for future development. We are fully qualified, competent and confident to maintain sustained and healthy economic development. However, we must also see that China is now in a critical stage seeing the transition of old drivers to new ones as well as transformation and upgrading. Given the uncertain and instable factors in the current international market, we still have a long way to go for the domestic economic restructuring amid a lot of difficulties and challenges. In the next stage, being united closely around the CPC Central Committee led by Xi Jinping, we should adhere to the new idea of development, follow the general principle of seeking progress in stability, and put emphasis on the core task of the supply-side structural reform, in order to expand aggregate demand moderately, deepen innovation-driven development vigorously, guide the social expectations effectively, resolve outstanding contradictions and problems incurred in economic operation in time, and consolidate the good trend of stable and sound economic development.


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