SCIO briefing on China's economic performance in Q1 2026

National Business Daily:

Despite the volatile international environment, China's main economic indicators still performed well in the first quarter. How do you assess the overall economic performance in the first quarter, and what are the main reasons for this? Thank you.

Mao Shengyong:

Thank you for your questions. Based on the data just presented, China's economy got off to a good start in the first quarter of this year. China's GDP rose 5% year on year, 0.5 percentage point faster than in the fourth quarter of last year. Meanwhile, employment remained generally stable, prices showed positive changes, and imports and exports of goods grew rapidly. Overall, the first quarter's performance was commendable. This performance had several key characteristics.

First, it fully demonstrated the strong resilience of the national economy. Since the start of this year, external instability and uncertainty have increased significantly, and the spillover effects of geopolitical conflicts have spread. Faced with a complex situation, the CPC Central Committee promptly stepped up macroeconomic regulation and proactively implemented more effective macroeconomic policies. We fully leveraged China's significant advantages in stable industrial and supply chains and strong supporting capabilities to effectively respond to changes in the external environment, defuse external risks, and drive a steady economic recovery. The figures point to an improvement in both supply and demand. On the supply side, agricultural production remained favorable. In industry, the year-on-year growth rate of industrial value added in the first quarter was 1.1 percentage points faster than in the fourth quarter of last year. The service sector also maintained rapid growth, with value added rising 5.2% year on year. On the demand side, the year-on-year growth rate of total retail sales of consumer goods in the first quarter was 0.7 percentage point faster than in the fourth quarter of last year. Fixed-asset investment swung back to growth, rising 1.7% in the first quarter. Foreign trade in goods registered its fastest quarterly growth rate in five years. Both the supply and demand sides showed strong performance. Given the high comparison base from the first quarter of last year and this year's more complex and severe external environment, China's economy got off to a genuinely strong start, fully demonstrating its resilience.

Second, it fully demonstrated the robust vitality of China's economy. We have seen firsthand how the continuously growing new economy and new growth drivers are boosting economic vitality. Over the years, and especially during the 14th Five-Year Plan period (2021-2025), China has fully implemented its innovation-driven development strategy, increasing investment and coordinating breakthroughs in technological and industrial innovation. This concerted effort across all areas has achieved strong results, driving the upgrading of the domestic industrial structure. These "new" industries and "new" economic sectors are increasingly becoming the backbone of economic growth. The new energy vehicle industry, which is familiar to everyone, has achieved global leadership in production, sales scale and quality after more than a decade of sustained effort, becoming a benchmark for leading industrial development. Let me give you two more examples. The equipment manufacturing industry has attracted widespread attention. In the first quarter of this year, the value added of the equipment manufacturing industry increased 8.9% year on year, significantly faster than the overall growth of industrial enterprises above designated size. It accounted for 35.1% of the value added of all industrial enterprises above designated size, a proportion that continued to increase, contributing nearly 50% of the growth in the value added of industrial enterprises above designated size. In January and February, the equipment manufacturing industry contributed 43.7% to the profit growth of all industrial enterprises above designated size. Another example is the high-tech manufacturing industry, which is of great concern to everyone and saw even more impressive growth in the first quarter of this year, rising 12.5% year on year. Although high-tech manufacturing accounts for less than 20% of the total value added of enterprises above designated size, it contributes 32.6% to the growth of those enterprises. According to the profit data of industrial enterprises above designated size in January and February, high-tech manufacturing accounted for 51.8% of the total profits of industrial enterprises. Through years of continuous effort, high-tech manufacturing has become more technologically advanced. Some sub-sectors have progressed remarkably from catching up to keeping pace, and even to leading the way. Data from industry and other sectors show that new growth drivers are increasingly taking the lead in driving economic development.

Third, it fully embodies the substantial gains of China’s high-quality development. When we talk about high-quality development, it embodies the new development philosophy which is innovative, coordinated, green, open and inclusive. As mentioned earlier, innovation has yielded abundant, tangible results. From the perspective of coordinated development, the data from the first quarter of this year also reflects new progress in coordination among industries, regions, and urban and rural areas. In the first quarter, the proportion of equipment manufacturing and high-tech manufacturing in the value-added of industrial enterprises above designated size rose further, up 1.4 and 1.2 percentage points year on year, respectively; the ratio of per capita disposable income of urban to rural residents was 2.23, narrowing by 0.04 year on year; and the income growth of residents in the central and western regions continued to outpace that in the eastern region. Moreover, the overall employment situation is stable, prices have shown positive changes, the supply of essential commodities for people's livelihood is sufficient, the results of the in-depth rectification of "involution-style" competition are becoming increasingly apparent, the comprehensive pilot program for opening up the service industry has been expanded, the Hainan Free Trade Port (FTP) is operating smoothly and orderly, and the number of pilot free trade zones has been further expanded to 23. All these indicators demonstrate the remarkable achievements China has made in high-quality development.

Fourth, it fully demonstrates China's institutional advantages and effective policy delivery. The socialist system with Chinese characteristics has the advantage of pooling resources to accomplish major tasks, and the more complex and volatile the external environment, the more obvious our institutional advantages become. Affected by the current geopolitical conflicts, international energy prices have risen sharply, with some countries experiencing soaring oil prices and supply shortages, severely impacting production and daily life. In contrast, the supply of our domestic energy resources is stable and orderly, and timely temporary price controls have been implemented. Residents' lives and enterprise production have not been affected. The energy supply for production and daily life is sufficient and well-guaranteed. This is thanks to our forward-looking layout and development of the new energy industry over several years, which has created a diversified energy supply system and greatly enhanced the autonomy and stability of China's economy. Currently, oil accounts for less than 20% of China's total energy consumption, while coal plays a stronger role in providing a safety net, accounting for more than 50%. In recent years, new energy sources such as wind and solar power have developed rapidly, leading to an increase in the proportion of non-fossil energy consumption. Overall, fluctuations in the international crude oil market have had a relatively small impact on the domestic market.

At the same time, we must recognize that there are many uncertainties in the external environment, geopolitical risks are rising, and there are still some problems in domestic economic performance. The contradiction between strong supply and weak demand still exists, and the foundation for economic recovery and improvement needs to be consolidated. In the next stage, we need to fully act on the guiding principles from the Central Conference on Economic Work and implement the plans adopted at the sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) National Committee, adhere to the principle of pursuing progress while ensuring stability and boosting quality and efficiency, focus on doing our own things well, and unswervingly promote reform and innovation to achieve effective qualitative improvement and reasonable quantitative growth in the economy.

Thank you.