Mao Shengyong:

9. Industrial transformation and upgrading delivered clear progress, and new growth drivers developed rapidly.

The economic structure continued to improve. In terms of the industrial structure, the growth rate of the added value created by the tertiary sector was 1.5 percent higher than that of the secondary sector. The figure accounted for 54.3 percent of GDP, 0.3 percentage point higher than the same period of last year. The value generated by the secondary sector took up 13.9 percent of GDP. As to the demand structure, final consumption expenditure contributed 78.5 percent to economic growth, or 47.1 percentage points higher than total gross capital formation. 

New industries and products also sprang up. As to the structure of the industry sector, the added value created by strategic emerging industries went up by 8.7 percent year-on-year, 2.0 percentage points higher than the growth rate of industries above the designated size. The output of new energy vehicles rose 88.1 percent, industrial robots 23.9 percent and integrated circuits 15.0 percent year-on-year. 

New types of consumption thrived. In terms of trade structure, national online retail sales registered 4.081 trillion yuan in the first half of the year, up 30.1 percent year-on-year. Specifically, the online retail sales of physical goods reached 3.1277 trillion yuan, up 29.8 percent. The figure accounted for 17.4 percent of the total retail sales of consumer goods, 3.6 percentage points higher than the same period last year. The online retail sales of non-physical goods was 953.3 billion yuan, up 30.9 percent.

Steady progress was achieved in green development. In terms of energy conservation and emissions reduction, energy consumption per unit of GDP fell by 3.2 percent year-on-year.

10. Deepened supply-side structural reform and positive market expectations 

Structural overcapacity cutting continued to be advanced. In the first half of 2018, the industrial capacity utilization rate reached 76.7 percent, an increase of 0.2 percentage points compared to the Q1 level, and an increase of 0.3 percentage points over the same period last year. The achievements in destocking were remarkable. The floor space of commercial buildings for sale dropped 14.7 percent year-on-year at the end of June. The leverage ratio and costs of enterprises continued to drop. The debt-to-asset ratio of industrial enterprises with annual revenue of 20 million yuan or more at the end of May stood at 56.6 percent, 0.6 percentage pointslower year-on-year. From January to May, the cost per 100 yuan of revenue from the principle business of industrial enterprises with annual revenue of 20 million yuan or more was 84.49 yuan, 0.31 yuan less year-on-year. Investment in weak areas saw rapid growth. In the first half of this year, investment in ecological protection and environmental governance grew by 35.4 percent, and investment in agriculture increased by 15.4 percent, 29.4 percentage points and 9.4 percentage points higher than the overall investment. Market expectations remained positive. In June, the PMI Composite Output Index was 54.4 percent; the manufacturing industry's PMI was 51.5 percent; the non-manufacturing industry's business activity index was 55.0 percent, pointing to continued expansion of the overall economy. 

In general, the national economy in the first half of 2018 has continued to experience stable performance and improved momentum. The favorable conditions supporting high quality growth have increased, creating a solid foundation for achieving the major economic and social development goals for this year. However, uncertainties in the international environment have been increasing, and the structural readjustment in China has entered a crucial stage. The country must stick to its policy of making progress while pursuing stability and maintaining strategic focus. China must adhere to the supply-side structural reform, expand effective demands and promote the real economy. Further, it should actively cope with international challenges, and prevent and resolve risks and potential problems in a bid to achieve stable social expectations. China should take a holistic approach in pursuing steady growth, reform, and structural readjustment as well as improving people's livelihood and preventing risks so as to ensure stable and healthy economic performance.

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