Hu Kaihong:

Ladies and gentlemen, friends from the press,

Good morning! Welcome to the SCIO briefing today! I'm Hu Kaihong, spokesperson of the SCIO. Today, I'm joined by Mr. Sheng Laiyun, spokesperson of the National Bureau of Statistics (NBS), who will brief you on China's national economic performance in the first three quarters of the year.

This year, the world economic recovery failed to reach expectations and domestic economy has faced increasing downward pressure. In the circumstances, the CPC Central Committee and the State Council, taking both the domestic and international situation into consideration, took steps to stabilize growth, deepen reform, restructure the economy, improve people's wellbeing and prevent risks. The central authorities exercised a range of macro, targeted and timely regulations, to deepen the reform and opening-up, vigorously promote mass entrepreneurship and innovation, while actively increasing the supply of public products and services. Hence, the economic performance has been generally stable with a combination of growth and better quality of the economy being the main trend.

First, we effectively responded to downward pressures and market risks to ensure the major economic indices remained within a rational zone. Second, we continued to promote a development strategy of allowing growth to be driven by innovation, while developing new engines and their supporting platform for growth. Third, we accelerated our cultivation of a new growth momentum by optimizing the industrial structure. Fourth, new growth points, growth poles and growth belts have emerged during the process of advancing new type of urbanization and promoting the overall development of the Belt and Road Initiative, the Yangtze Economic Belt development plan and Coordinated Development of Beijing, Tianjin and Hebei Region. Fifth, we further promoted institutional innovation and accelerated reform in an even more stable way. Sixth, we made great efforts to increase the effective supply of public products and services, continuously benefiting the people with our achievements in development.

Generally speaking, while ensuring stable economic growth, we have increased both urban and rural employment, stabilized consumer prices, raised incomes, improved the ecological environment and optimized the economic structure. At such a hard time with multiple difficulties and challenges, such a performance has been anything but easy.

At present, the situation is complicated by difficulties both at home and abroad, China's economy is undergoing a difficult transition between old and new driving forces, but the generally stable trend of growth has remained comparatively unchanged.

We will carefully continue to implement all the policies and deployments from the CPC Central Committee and the State Council, resolutely deepen the reform and opening-up, accelerate structural adjustment, industrial transition and upgrading, and promote "mass entrepreneurship and innovation" and the "twin engines," namely increasing public products and services, to establish a solid basis that will ensure a medium-high growth rate and achieve medium-high quality of the economy. We have the conditions, ability and confidence to meet the yearly target of economic growth.

That is the end of my briefing. Now let's open the floor to Mr. Sheng Laiyun, who will give you a more detailed briefing on the national economic performance during the first three quarters of the year.

Sheng Laiyun:

Friends from the press, good morning! It's a great pleasure to meet you again. Time flies; three quarters have been completed in the fiscal year. As usual, I will brief you on the major indices before taking questions.

In the first nine months of the year, Chinese economic operations have remained smooth and steady.

According to preliminary estimates, the gross domestic product (GDP) in the first three quarters totaled 48.78 trillion yuan, a year-on-year increase of 6.9 percent calculated in terms of comparable prices. In the first quarter, GDP grew by 7.0 percent compared to the same period of on last year, the second quarter was the same, while third quarter growth was 6.9 percent. The added value of the primary industry was 3.92 trillion yuan, up 3.8 percent year-on-year; secondary industry 19.78 trillion yuan (up 6.0 percent); and tertiary industry 25.08 trillion yuan (up 8.4 percent). The third quarter GDP grew by 1.8 percent compared to the previous quarter.

1. The situation of agricultural production is fairly good.

The total output of summer grain reached 141.07 million tons, an increase of 4.47 million tons compared to the previous year or 3.3 percent. Total output of early rice was 33.69 million tons, a drop of 320,000 tons, or 0.9 percent. In the first three quarter of this year, the total output of pork, beef, mutton and poultry reached 58.96 million tons, a year-on-year fall of 1.3 percent. The output of pork was 38.28 million tons, down 3.6 percent.

2. Industrial production growth slowed down but remained stable.

In the first three quarters, the added value at comparable prices of industrial enterprises above designated size rose 6.2 percent year-on-year. The growth speed dropped 0.1 percentage points over the first half of this year. An analysis of the different types of enterprises showed that the value added growth of State holding enterprises rose 1.3 percent, collective enterprises 1.7 percent and share-holding enterprises 7.5 percent. Meanwhile, there was a 3.5 percent growth among enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan. The value added growth of the mining industry was 3.3 percent year-on-year; manufacturing 7.0 percent and production and supply of electricity, heat, gas and water 1.7 percent. Out of the 565 kinds of industrial products, 288 saw year-on-year output gains. In the first three quarters, the output sales ratio of industrial enterprises above designated size was 97.5 percent. Their export delivery value was 8.62 trillion yuan, down by 1.1 percent. In September, the total added value rose 5.7 percent year-on-year, or 0.38 percent month-on-month.

In the first eight months of this year, the profits made by industrial enterprises above designated size stood at 3.77 trillion yuan, down 1.9 percent year on year. The cost per-hundred-yuan turnover of primary activities reached 86.13 yuan. The profit rate from primary activities was 5.38 percent.

3. Growth of investment in fixed assets down to some extent

In the first three quarters of 2015, investment in fixed assets (excluding rural households) was 39.45 trillion yuan, a year-on-year nominal growth of 10.3 percent, or 12.0 percent adjusted for inflation. The growth speed dropped by 1.1 percentage points over the first half of this year. Of this total, the fixed assets investment of State holding enterprises reached 12.52 trillion yuan, an increase of 11.4 percent; private investment reached 25.56 trillion yuan, up 10.4 percent, and accounting for 64.8 percent of total investment. Investment in the primary industry reached 1.10 trillion yuan, a rise of 27.4 percent year-on-year; that of the secondary industry was 16.22 trillion yuan, up 8.0 percent; and that of the tertiary industry was 22.13 trillion yuan, up 11.2 percent. The amount of in-place investment in the first three quarters was 41.77 trillion yuan, up 6.8 percent. Specifically, government budgetary funds increased by 20.5 percent, domestic loans dropped by 4.4 percent, self-raised funds increased by 8.2 percent and foreign investment was down by 26.2 percent. In the first three quarters this year, the total planned investment in newly-started projects was 29.98 trillion yuan, a year-on-year increase of 2.8 percent. In September, investment in fixed assets (excluding rural households) went up by 0.68 percent month-on-month.

In the first three quarters, total investment in real estate development was 7.05 trillion yuan, a year-on-year nominal growth of 2.6 percent, or 4.2 percent adjusted for inflation. The growth speed dropped by 2.0 percentage points over the first half of this year. Of this total, investment in residential buildings went up by 1.7 percent. The total floor space of houses newly started was 1.15 billion square meters, down by 12.6 percent. Specifically, the floor space of residential buildings begun dropped by 13.5 percent. The floor space of commercial buildings sold reached 829.08 million square meters, up 7.5 percent, exceeding that of the first half of this year by 3.6 percentage points. Of this total, that of residential buildings rose 8.2 percent. The sales of commercial buildings were 5.67 trillion yuan, up15.3 percent. Of this total, that of residential buildings rose 18.2 percent.The land space purchased by real estate development enterprises was 158.90 million square meters, down 33.8 percent. By the end of September, the floor space of commercial buildings for sale reached 665.10 million square meters, up 16.4 percent. The actual funds for real estate development enterprises in the first three quarters reached 9.07 trillion yuan, up 0.9 percent.

4. Commodity sales continued to grow steadily

In the first three quarters, total retail sales of consumer goods reached 21.61 trillion yuan, for year-on-year nominal growth of 10.5 percent, or 10.5 percent adjusted for inflation. The growth speed increased by 0.1 percentage points over the first half of this year.

Specifically, retail sales of units above designated size stood at 10.11 trillion yuan, up by 7.5 percent. In terms of different areas, retail sales in urban areas reached 18.58 trillion yuan, up 10.3 percent, and sales in rural areas stood at 3.02 trillion yuan, up 11.7 percent. Grouped by consumption patterns, the total income of the catering industry was 2.31 trillion yuan, up 11.7 percent year on year; and the retail sales of goods grew to 19.30 trillion yuan, up 10.4 percent. In particular, retail sales of units above designated size reached 9.49 trillion yuan, up 7.5 percent. In September, the total retail sales of consumer goods grew by a nominal 10.9 percent year-on-year (a growth of 10.8 percent adjusted for inflation), or 0.87 percent month-on-month.

In the first three quarters, online retail sales reached 2.59 trillion yuan, a growth of 36.2 percent year-on-year. Specifically, online retail sales of goods registered 2.15 trillion yuan, up by 34.7 percent, accounting for 10.0 percent of the total retail sales of consumer goods. The online retail sales of services were 440.4 billion yuan, up by 43.6 percent.

5. Imports and exports declined compared to the previous year

The total value of imports and exports in the first three quarters was 17.87 trillion yuan, a year-on-year decrease of 7.9 percent. The total value of exports was 10.24 trillion yuan, a decline of 1.8 percent; and that of imports was 7.63 trillion yuan, down 15.1 percent. The trade surplus was 2.60 trillion yuan. In September, the total value of imports and exports was 2.22 trillion yuan, down 8.8 percent year-on-year. The total value of exports was 1.30 trillion yuan, down by 1.1 percent; and that of imports 924.0 billion yuan, down 17.7 percent.

6. Consumer prices remain stable

In the first three quarters, consumer prices went up by 1.4 percent year-on-year, which is 0.1 percentage points higher than the first half of the year. Specifically, prices went up by 1.5 percent in cities and 1.3 percent in rural areas. Grouped by commodity categories, prices for food rose 2.3 percent; tobacco, liquor and their products increased by 1.6 percent; clothing rose 2.9 percent; household facilities, articles and maintenance services were 1.1 percent higher; prices for health and personal care grew by 1.8 percent; transportation and communication prices dropped by 1.8 percent; recreation, education, culture articles and services grew by 1.5 percent; and housing was 0.7 percent higher. In the food sector, grain grew 2.3 percent, oil or fats fell 3.7 percent, pork was up by 7.7 percent and fresh vegetables rose 6.9 percent. In September, consumer prices went up by 1.6 percent year on year, or 0.1 percent month-on-month. In the first three quarters, producer prices for industrial products dropped by 5.0 percent year on year. In September, there was a drop of 5.9 percent year on year, or 0.4 percent month-on-month. In the first three quarters, purchasing prices for industrial producers fell 5.9 percent year on year. In September, the price was down by 6.8 percent year on year, or 0.6 percent month-on-month.

7. Incomes maintain rapid growth

Based on the integrated household survey, in the first three quarters, national per capita disposable income was 16,367 yuan, a nominal growth of 9.2 percent, or a real increase of 7.7 percent after deducting price factors. There was a 0.1 percentage point increase compared to the first half year. In terms of permanent residence, the per capita disposable income of urban households was 23,512 yuan, a nominal growth of 8.4 percent, or a real growth of 6.8 percent. The per capita disposable income of rural residents was 8,297 yuan, up 9.5 percent in nominal terms, or 8.1 percent in real terms. The median national per capita disposable income was 14,460 yuan, a nominal increase of 10.2 percent. By the end of the third quarter, the number of rural migrant workers stood at 175.54 million, virtually unchanged from the same period of last year. In the third quarter, the average monthly income of migrant workers was 3,052 yuan, up 9.1 percent year on year.

8. Steady progress in structural adjustment

The industrial structure was increasingly optimized. In the first three quarters, the added value of the tertiary industry accounting for 51.4 percent of GDP, which was 2.3 percentage points higher than the same period last year and 10.8 percentage points higher than secondary industry. The domestic demand structure continued to be improved. In the first three quarters, the final consumption expenditure contributed 58.4 percent to GDP growth, which was 9.3 percentage points higher than the same period last year. The income gap between urban and rural households was further narrowed. In the first three quarters, the real growth of the per capita disposable income of rural households was 1.3 percentage points higher than urban households. The per capita disposable income of urban households was 2.83 times that of rural households, a decrease of 0.03 compared to the previous year. New achievements were made in energy conservation and consumption reduction. In the first three quarters, unit energy consumption in GDP decreased by 5.7 percent year on year.

9. Money supply grows steadily

By the end of September, the balance of broad money (M2) was 135.98 trillion yuan, a year-on-year growth of 13.1 percent; the balance of narrow money supply (M1) was 36.44 trillion yuan, up by 11.4 percent; and the balance of cash in circulation (M0) was 6.10 trillion yuan, up by 3.7 percent. The amount of outstanding loans at the end of September was 92.13 trillion yuan, while the amount of outstanding deposits was 133.73 trillion yuan. In the first three quarters, newly increased loans totaled 9.90 trillion yuan, an increase of 2.34 trillion yuan year on year; newly increased deposits reached 13.00 trillion yuan, an increase of 1.93 trillion yuan year on year. In the first three quarters, social financing increments reached 11.94 trillion yuan.

That completes the major economic data for the first three quarters. Now I'm ready to answer your questions.

Hu Kaihong:

The floor is open. Please identify which media outlet you represent when asking a question.

CCTV:

I have two questions. First, the GDP growth rate in the first and third quarters stood at 6.9 percent, less than 7 percent. Could you please tell me, what is the reason for this? Second, the GDP growth rate is for the first time lower than 7 percent since the second quarter of 2009. What do you make of it?

Sheng Laiyun:

Thank you for your questions. The GDP growth rate in the third quarter stood at 6.9 percent, lower than 7 percent, but only down 0.1 percentage point, so it still should be seen as being kept around 7 percent. As for why the growth rate fell slightly in the third quarter, I think the main reason is that since the beginning of the third quarter, there have been some new changes and problems in the international and domestic economic and financial situations.

First, from an international perspective, the recovery of the world economy is less than expected. Some time ago, international institutions such as the World Bank and the International Monetary Fund have, one after another, generally lowered their expectations of the world's economic growth by 0.2-0.3 percentage points. Another factor from the international perspective is that the United States is expected to further increase the interest rate, resulting in a big turbulence in the prices of large amounts of commodities, stock markets and currency markets in the world. Many countries are faced with further currency devaluation, which has increased the pressure on China's exports. Therefore, China's exports in the third quarter stood at -5.7 percent, and the decline is 2.8 percentage points more than that of the second quarter. Therefore, a downward pressure on exports, one important part of the "three carriages" to drive economic growth (investment, consumption, and export), has been increased.

From a domestic perspective, the main reason is that China is still in a critical stage of structural adjustment. Its traditional industries are not only in a phase of destocking, but also in an actual phase of de-capacity. The growth rate of traditional industries involving iron, steel, cement and building materials have all declined. In the first three quarters, the output of crude steel fell by 2.1 percent, and that of cement fell by 4.7 percent – the figures show that these traditional industries are experiencing an actual stage of de-capacity, creating the downward pressure on industries for a short period of time. Another reason is that the industries involving auto and mobile phones, which enjoyed fast growth in the early stages, have entered a period of market capacity adjustment.

So, multiple factors from the international and domestic perspectives have increased downward pressure on the economy in the third quarter, and this is the very important reason for the decline of the economic growth rate in the third quarter.

As for what we think of the growth rate, which is below 7 percent, our general opinion is that although the economic growth rate fell slightly, an overall stable situation has not changed, and the trend of progress and improvement in stability has not changed. Why do we feel this way? First, economic operation is still in a reasonable range. As I said just now, although the growth index fell slightly, it still stood at around 7 percent. The overall performance of the employment index was still good, with the newly added employment in the first three quarters having over-fulfilled the target of the whole year. According to our survey, the unemployment rate in September was around 5.2 percent, a slight rise when compared with the previous two months, mainly because August and September are the peak season for Chinese college graduates to enter the labor market, and it therefore increased the pressure on the labor market to a certain extent. However, according to our survey, the main situation of the unemployment rate among the people aged 25-60 is stable. Consumer prices from January to September rose by only 1.4 percent, while residents' income remained at a relatively fast growth, higher than that of the GDP. These indexes have fully explained that the current economic operation in China is still relatively stable and still in a reasonable range.

Second, I think the trend of the Chinese economy should also be analyzed from its structure. The industrial structure continues to be optimized, and industrial adjustment also continues to be promoted. The most outstanding performance is in the service industry which still enjoys a relatively fast growth. The trend that the industrial structure has changed from originally being industry-led to service industry-led is more obvious. We have seen that the proportion of the tertiary industry has accounted for 51.4 percent of the GDP, nearly two percentage points higher than the 49.5 percent of the first half of the year, and 2.3 percentage points higher than the same period of last year. This kind of industrial adjustment is steadily advancing.

In addition, the momentum of transformation and upgrading is also very good. Promoted via a series of polices enacted by the central government to "encourage the people to do business creatively and drive innovation," China's new industries, new industrial patterns, new products, new economy, and new motive powers are enjoying a relatively fast growth and are full of vigor. From January to September, the growth rate of online retail sales was kept at around 36 percent, while the growth rate of new products such as new energy vehicles doubled. In the industrial structure, the added value growth rate of the high-tech industry still reached 10.4 percent, which was 4.2 percentage points higher than that of the industries above the designated size. These all show that China's industrial structure upgrading is accelerating.

Therefore, the above situation shows that in the new normal state of economy, the growth speed shift, structural optimization, and change of the growth impetus are all advancing systematically. This also shows that the adjustment is in line with development laws, the transformation is in line with the directions, and the development is in line with expectations. Therefore, the overall development trend of China's economy has not changed.

Financial Times:

The chief economist with the People's Bank of China recently estimated that China's annual economic growth rate would be reduced by 0.5 percentage points due to your absence from the Trans-Pacific Partnership (TPP). What's your thought on this issue? Do you agree with his estimation?

Sheng Laiyun:

Thanks for your question. I've also noticed such a report, but could not understand how this figure was calculated, so I cannot give a comprehensive comment on it. However, I do think the TPP agreements will affect China, although the short-term impact will not be serious. Why? First, there are some uncertainties in the process from preliminary signing to final passage and implementation. Second, China has adopted some countermeasures such as speeding up bilateral free-trade negotiations, advancing promotion of "Belt and Road" initiative, and accelerating the development of free trade zones that can help ease the fallout from the Trans-Pacific Partnership. More importantly, the space offered by the Chinese market is huge. Market demand has the final say in trade. Therefore, either developed or developing countries are still eager to enter the Chinese market, and we are willing to strengthen bilateral cooperation based on equality and mutual benefit. That's why the short term impact will not be so severe.

However, we also need to pay close attention as the TPP is a multilateral trading system agreement between 12 countries accounting for 40 percent of the global economy. Once the agreement is enforced, nearly 20,000 commodities will be granted zero-tariff treatment, which will impose some pressure on our foreign trade. We must take the opportunity to upgrade domestic industry, regain the initiative, turn this challenge into opportunity, and boost China's industrial upgrading. That's my basic view. Thank you.

China National Radio:

I'd like to ask the spokesman, the previous analysis said the macro economy statistics show that China's economy is facing its biggest pressure since the financial crisis. Would you please comment on this? What's more, I also just saw that statistics show the growth rate of fixed-asset investment for the secondary industry is the slowest. In the short and medium-term, which factors could be the new forces driving these processes when the economy's old dynamics are being transformed into new ones? Thank you.

Sheng Laiyun:

Regarding the downward pressure, I commented on it when I answered the first reporter's question just now. I feel the current pressure is coming from two aspects: on the one hand, there is the international aspect, because now the world's economy is still generally in an in-depth adjustment after the crisis. It demonstrates special features such as low growth, low prices, low interest rates, imbalance and the possibility of increasing financial turbulence. Such a situation will not be easy to change in the short term. Developed countries are reducing their imports from the developing countries by speeding up their own re-industrialization. At the same time, the developing countries' economies are generally moving downward, so their market demands are relatively weak while their manufacture costs are relatively cheap. Under such circumstances, they have taken up a portion of space for our exports in foreign trade. So, we face quite a big pressure in exports and imports because we have to face rivals from developed countries and also the pressure from developing countries.

On the other hand, the downward pressure comes from the domestic structure adjustment. Now, we are overcoming many barriers in the process of structure adjustment, the traditional industries' excess production capacity is relatively large, and the structural conflicts accumulated over the years need to be adjusted. The traditional production capacity needs more time for destocking and de-capacity. In the short term, there will definitely be a downward pressure for the industry.

As for the second question about growth dynamics, I feel that China is never experiencing a lack of growth dynamics. Although the industry growth is sliding downwards, our service industry is growing more rapidly. Since 2012, when the service industry's added value accounted more than that of the secondary industry for the first time, transformation from industry-oriented to service-oriented have sped up. So, the service industry will become a very significant supporter of the recent economy's stable growth.

From the perspective of demands, even though investment growth and export growth are slowing down, our consumption growth is comparably steady. From January to September, the growth of the total retail sales of consumer goods would be 10.5 percent after deducting price factors and the growth rate is increasing month by month. This has to give thanks to industries like tourism, healthcare, sanitation, education, medicine, and others which are related to the structural upgrading of residents' consumption. Moreover, the Chinese government has further accelerated reforms and innovations, while also promoting "mass entrepreneurship and innovation." Thus, new dynamics like new industries, new industry situations, new products, and new models are very quickly being born and grown. All of these aspects are the driving forces for China's economic growth. So, it has to take some time for China's new growing dynamics, as well as the transformation of the industry structure and consumption structure to push China's economy to a path that will keep steady, stable and fast growing. Thanks.

China News Service:

We noticed that the per capita disposable income in the first three quarters grew 7.7 percent, higher than the 6.9 percent GDP growth in the same period. This phenomenon has occurred in several quarters. Could you tell me the reason for this? Thank you.

Sheng Laiyun:

One of the highlights of economic growth this year is the steady and fast growth of per capita disposable income, which has outperformed the overall GDP growth since last year. Reasons for this are multifold, with both underlying structural and specific factors, especially thanks to the favorable government measures for promoting income growth.

From structural factors, we have seen an important change in China's industrial structures and demand structures along with demographic shifts, which in turn changed the demand-supply relationship in the labor market. Employment is better than expected with an increasing wage rate. Therefore, Chinese people's income growth has stayed strong.

Policy factors accounted more for the increasing per capita disposable income. In terms of wage income, it increased 9.1 percent in the first three quarters due to policy measures to improve standard wages in urban and rural areas since last year. The government has paid the increased wages retroactively since last October, greatly improving the people's income during the period.

In terms of transfer income, the government has made great efforts to increase people's income on this front, as it raised the standard wage for retirees and raised allowances for endowment insurance. For example, monthly basic pension benefits for rural and non-working urban residents increased from 55 yuan to 70 yuan per person. All of these factors accounted for the increase of people's transfer income.

Chinese people's property income also increased. In urban areas, the rental market has stayed strong for the past two years as we saw a 12.6 percent increase for per capita house-rental income. In rural areas, income from land leases grew stronger with the acceleration of land transfers as we saw a 17.1 percent increase of per capita land lease income in the first three quarters. Combining statistics from urban and rural areas, Chinese people's property income improved 10.1 percent.

Another factor prompting income growth lies in the better performance of household business operations. In rural areas, the price of agricultural products, especially pork, witnessed steady growth since the second quarter, which improved people's income in the animal husbandry industry. In urban areas, despite mounting pressure with the development of small and medium-sized enterprises (SMEs) and a depressed market environment for household business operations, the government kept raising the tax threshold for those businesses in order to boost their growth.

All in all, structural factors, the stable economic growth, as well as government measures to improve the people's well-being, accounted for the fast increase of the income of residents.

Phoenix Star TV:

We have seen GDP growth fall below seven percent in the third quarter this year. Do you think seven percent is the number of China's new normal? Also, as the 13th Five-Year Plan is being initiated, what GDP growth fluctuations, in your opinion, are more reasonable?

Sheng Laiyun:

I think your focus is on the trend of China's economy after the third quarter this year. In responding to the question, my general view is that China's economy will continue to keep a stable trajectory no matter whether it is in the fourth quarter or next year. How could we hold that view? The fulcrum supporting economic growth and the pressure affecting the upward trend of China's economy have reached a condition of new balance. In my personal view, there are three forces influencing China's economy. The first one is the downward pressure, and we previously discussed its two aspects. This kind of pressure will continue to affect the economy to some extent, especially before the completion of China's economic restructuring.

The second is the supportive force of China's economy as it faces strategic opportunities as the fundamental elements of China's economy are unchanged. Where does the supportive force, which is comparatively strong, come from? First, it comes from the unfinished industrialization and urbanization in China. Comparing the average level, especially the degree of the developed countries, China's industrialization and urbanization have a great gap to tap. Therefore, it produces a stimulus for new industrialization and urbanization with the adoption of new technologies. The supportive force also comes from the unbalanced economy as the landlocked middle and west regions in China are still backward and have great potential to develop. The supportive force also comes from the upgrading consumption structure which, as I just referred to, comes from China's success in satisfying the subsistent demand of the people by making strides to improve their accommodation and travel needs so as to target the well-to-do members of society. The trend of an upgrading consumption pattern is inevitable, as we are expecting better lives and the demand for education, travel and healthcare are all consecutively increasing. We have realized from online press coverage that many Chinese shopped frenetically while traveling abroad, during the seven-day National Day holiday, which proved the great potential of the country's consumption power. Therefore, the three aspects of the supportive force are backing the stable operation of the Chinese economy.

There is another force which has been referred to as a new stimulus power. The bonuses of both reform and innovation have been further realized. Additionally, despite the declining population of China's labor forces, demographic quality is improving, creating a new bonus. There are, for example, almost seven million university graduates who form the basis of China's talent pool. Stimulated by these elements, including new economy, new products and new industry conditions, a new force is being formulated into what we call “a new stimulus.”

Managed by these three forces, including the force of economic downward pressure, the supportive force and the new stimulus, the trend of the Chinese economy has taken shape. Presently, because we are in a key period of China's economic restructuring, in which the traditional industries have represented a major part of the economy, the downward pressure will have a greater impact on the economic restructuring. However, as time goes by and with the acceleration of innovation, the supportive force and new stimulus will all together write off the impact of the downward pressure. Therefore, the Chinese economy will continue to keep a stable and high growth at a moderately high speed. This indicates a possible economic curve in the fourth quarter and the period of the coming years. However, this is a process which may fluctuate along with the global environment. Even though the fluctuation is normal, the general trend of economic operation in China will be unchanged. Thank you.

Reuters:

This time, we are seeing a reformed GDP statistical method shifting to quarterly from cumulative. What impact did this have on the year-on-year increase or sequential growth of GDP in Q3?

Sheng Laiyun:

This is our first time to release a quarterly GDP absolute amount and growth rate. In early October, the Chinese government officially adopted the IMF's Special Data Dissemination Standard (SDDS), marking a shift from GDDS to SDDS. This is a significant step forward for Chinese statistics and has a great effect. From the perspective of statistical analysis, quarterly GDP data helps us calculate the sequential growth rate more easily. For economic analysts, the sequential growth rate is very important, since it is an essential indicator in determining short-run economic fluctuations and future trends. However, we faced great pressure. It's not just a simple change in the accounting method, but actually a complete reform of the entire data collection system and data processing mode that has taken years to achieve. In future, in accordance with general requirement of openness and transparency, we will deepen reform in our statistics methods and systems, and strengthen the GDP accounting foundation. That will be our next target to achieve.

The reform of calculation method has little effect in regard to the year-on-year increase rate, because GDP accounting has to maintain comparability. Although there is a range of changes in regard to the system and methodology, as well as basic data in total, the volume of the same period in previous year that is used to calculate the year-on-year increase has also changed. Thus, the quarterly GDP absolute amount based on this basic data changes, while the growth rate does not change much. The sequential growth rate is calculated on the basis of a seasonal adjustment mode. We have developed a Chinese sequential growth accounting model in collaboration with several domestic universities based on Western models. In our model, the effects of the long holidays, such as Chinese New Year and National Day, have been included, and automatic data correction will be carried out according to the latest data. Quarterly GDP accounting provides GDP data directly without calculation, and the quarterly GDP data has higher quality in accurate measurement of economic activities. Therefore, quarterly GDP accounting will produce high-quality sequential growth data, which will more quickly reflect short-run changes in macro-economic operation.

Hu Kaihong:

This is the end of today's press conference. Thanks to Mr. Sheng, and thank you all.

Sheng Laiyun:

Thank you.

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