SCIO briefing on China's economic performance in first quarter of 2023
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E-mail China.org.cn, April 28, 2023
ITAR-TASS:
We understand that the contribution of China's consumption to GDP growth declined during the pandemic. What's the situation like now? What are the predictions from NBS? Thank you
Fu Linghui:
Thank you for your question. This year, the contribution of consumption to economic growth has rebounded markedly. In the first quarter, the contribution of final consumption to GDP growth reached 66.6%, a significant rebound over the whole of last year. Going forward, consumption is expected to continue to play a leading role in driving economic growth. First, gradual economic recovery has improved employment, and the surveyed urban unemployment rate dropped significantly in March. This will in turn help increase personal incomes and boost capacity for consumption. Meanwhile, as the impact of the epidemic recedes and consumption scenarios expands, consumption will continue to increase. From the perspective of medium- and long-term development, China's per capita GDP reached $10,000 and consumer needs are rapidly increasing, and the long-term consumption outlook is promising. Taking these factors into consideration, consumption will play a stronger role in driving economic growth. Thank you.
Kyodo News:
What is the economic outlook for the second quarter? Will the economic data improve in the second quarter of this year? What are the major risks?
Fu Linghui:
People are most concerned about the situation in the next stage. So far this year, the Chinese economy has shown encouraging recovery momentum. The main indicators have stabilized and picked up, the vitality of business entities has increased, and market expectations have improved notably, laying a solid foundation for achieving the country's annual growth target. In the next stage, we expect the internal forces powering economic growth to strengthen gradually. We also expect macro policies to exert an obvious effect and overall economic performance to improve. Considering that the second quarter of last year was affected by the epidemic and forms a low base for comparison, economic growth in the second quarter this year is likely to be significantly faster than in the first quarter. However, due to higher comparison bases, growth might be slower in the third and fourth quarters than in the second quarter. Without considering the base effect, economic growth throughout the year will likely trend upward. The main underpinning factors are as follows:
First, the role of consumption in driving economic growth is gradually increasing, and the trend of consumption rebounding has been evident since the beginning of this year, enhancing its driving contribution to economic growth. As mentioned earlier, the contribution rate of final consumption to economic growth has increased compared to last year. With the improvement of the employment situation, the effectiveness of policies aimed at boosting consumption, and the increase in consumption scenarios, residents' consumption capacity and willingness to spend are expected to increase. At the same time, policies to actively increase spending on big-ticket items such as new energy vehicles and green and smart home appliances, to promote the integration of online and offline consumption, to develop new forms and models of consumption, and to accelerate the quality improvement and expansion of rural markets, are all conducive to the sustained growth of consumption, which in turn drives economic growth.
Second, stable growth in investment is expected to continue. Since the beginning of this year, all localities have actively advanced the construction of major projects, resulting in overall steady growth in investment. Fixed-asset investment grew by 5.1% in the first quarter. Going forward, traditional industries will continue to undergo transformation and upgrading, emerging industries will continue innovation and development, and support for the real economy is increasing, all of which are favorable for investment growth. In the first quarter, investment in manufacturing grew by 7%, outpacing overall investment growth. In the coming stage, in line with major national strategies and the 14th Five-Year Plan, we will focus our efforts on promoting infrastructure investment, aiding the further expansion of investment. In the first quarter, infrastructure investment grew by 8.8%, faster than overall investment growth. Moreover, as people's demand for buying homes or improving their housing situation increases, we have seen positive changes in real estate sales. Consequently, investment in real estate development is expected to gradually stabilize.
Third, the driving force of industrial transformation and upgrading has been enhanced. China has been fully implementing an innovation-driven development strategy, boosting its strategic scientific and technological strength, and promoting industrial upgrading and development. Technologies such as 5G networks, information technology, and artificial intelligence have developed rapidly, and new industries continue to emerge. In the first quarter, the added value of the equipment manufacturing industry increased by 4.3%, and the industrial technology intensity steadily increased. At the same time, the green and low-carbon transformation of the energy mix is accelerating, demands for new products are expanding, and more traditional industries are carrying out energy-saving and consumption-reducing transformation, all of which also enhance the driving effect. In the first quarter, the production of new energy vehicles and solar cell products maintained rapid growth. The industries' high-end, intelligent, and green development will inject new impetus into China's economic development.
Fourth, macro policies have continued to demonstrate their effectiveness. Since the beginning of this year, all localities and departments have fully implemented the guiding principles of the Central Economic Work Conference and the arrangements of the government work report. They have pursued a proactive fiscal policy with greater intensity and enhanced its performance while ensuring prudent monetary policies are precise and effective. They have focused on efforts to stabilize economic growth, employment, and prices. The policy effects have continued to emerge, and the economy's operation stabilized and rebounded in the first quarter.
In the next stage, as various decisions and arrangements made by the CPC Central Committee and the State Council are further implemented in detail, policy effects will become more evident. China's economic development momentum will continue to grow, promoting the recovery and improvement of economic operations.
Thank you.
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