SCIO briefing on China's economy in January and February

The State Council Information Office (SCIO) held a press conference in Beijing on Monday to provide information on China's economic performance in January and February. March 19, 2020

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference organized by the State Council Information Office. We have invited Mr. Mao Shengyong, director general of the Department of Comprehensive Statistics and spokesperson of the National Bureau of Statistics, to brief you on China's economic performance in the first two months of this year. He will also be happy to answer your questions. Now I give the floor to Mr. Mao.

Mao Shengyong:

The Chinese economy withstood the impact of the COVID-19 epidemic in January and February. Under the strong leadership of the Communist Party of China (CPC) Central Committee with Xi Jinping at its core, governments at all levels and various departments coordinated to control and prevent the spread of COVID-19 while advancing economic and social development during the first two months of this year. We have already achieved some encouraging phased results. Thanks to promotional policies and measures, enterprises have accelerated resumption of work and production. Industries and social life are gradually returning to normal. The national economy is running smoothly, and fundamental livelihood has been effectively guaranteed. 

First, agricultural production has remained strong as spring plowing and farming preparations commence. 

The sown area of winter wheat nationwide reached 331 million mu (about 22 million hectares). The present seeding situation is stable, and the growth is generally good. As of the end of February, the proportion of first- and second-class seedlings in the main winter wheat production areas increased by nearly 3 percentage points compared with the same period of last year. The area of vegetable cultivation has expanded. Spring plowing preparation work has been deployed nationwide, and supply of agricultural materials such as seeds, fertilizers and pesticides has been guaranteed.

Second, industrial output decreased but production of important materials saw a constant increase. 

From January to February, the value added of industries above designated size fell by 13.5% year-on-year. In terms of different types of economic entities, the value added of state-holding enterprises fell by 7.9%, joint-stock enterprises dropped by 14.2%, foreign-invested and Hong Kong, Macao and Taiwan-invested enterprises fell by 21.4% and private enterprises fell by 20.2%. In terms of the three major categories of industries, the added value of the mining industry fell by 6.5%, the manufacturing industry dropped by 15.7%, and electricity, heating, gas and water production and supply industries fell by 7.1%. In terms of product output, production of medical and protective materials and daily necessities grew rapidly. Output of masks and distilled alcohol increased by 127.5% and 15.6%, respectively, while frozen meat and instant noodles increased by 13.5% and 11.4%, respectively. Growth of high-tech products remains promising. Output of smart watches, smart bracelets, semiconductor devices and integrated circuits increased by 119.7%, 45.1%, 31.4% and 8.5%, respectively. Production of basic raw materials was stable, and the output of cast iron, crude steel, flat glass and 10 non-ferrous metals increased by 3.1%, 3.1%, 2.3% and 2.2%, respectively. According to survey data on purchasing managers nationwide, as of February 25, the resumption rate of large and medium-sized manufacturing enterprises reached 85.6%, and production and operation activities continue resuming smoothly.

Third, the service industry dropped but a new emerging service industry maintained development momentum. 

From January to February, the national service industry production index decreased by 13.0% year-on-year. On major industries, the financial industry grew by 4.5%, the information transmission, software and information technology services industry increased by 3.8%, while other relevant industries declined to varying degrees. In February, the business activity index of the service industry was 30.1%, of which the business activity index of the financial industry was 50.1%, which continued to expand. The business activity indices of the telecommunications and internet software industries were 43.3% and 41.4%, respectively, higher than the average of all service industries respectively by 13.2 and 11.3 percentage points, which were significantly better than the overall performance of the service industry.

Fourth, market sales dropped but online retailing of daily necessities and physical commodities increased dramatically. 

From January to February, total retail sales of consumer goods exceeded 5.2 trillion yuan (US$743 billion), a year-on-year decrease of 20.5%. Location of business entities made a difference: Retail sales of consumer goods in urban areas hit nearly 4.49 trillion yuan (about US$634 billion), a year-on-year decrease of 20.7%, while retail sales of consumer goods in rural areas were 724.9 billion yuan (US$103.3 billion), a year-on-year decrease of 19%. Across consumption types, catering revenue was 419.4 billion yuan (US$59.7 billion), a year-on-year decrease of 43.1% and retail sales were nearly 4.8 trillion yuan (US$682.8 billion), a year-on-year decrease of 17.6%. Commodities used in daily life showed a trend of growth. Food commodities like grain and cooking oil, beverages and traditional Chinese and Western medicines increased by 9.7%, 3.1% and 0.2%, respectively. From January to February, China's online retail sales surpassed 1.37 trillion yuan (US$195.3 billion), a year-on-year decrease of 3%. Among them, online retail sales of physical goods exceeded 1.12trillion yuan (about US$160 billion), a year-on-year increase of 3%, accounting for 21.5% of the total retail sales of consumer goods, an increase of 5% over the same period of last year.

Fifth, investment in fixed assets decreased, and investment in high-tech industries and social sectors fell below the average level.

From January to February, investment in fixed assets (excluding farmers) across the country exceeded 3.33 trillion yuan (US$474.7 billion), a year-on-year decrease of 24.5%. Across various sectors, infrastructure investment fell by 30.3%, manufacturing investment fell by 31.5% and real estate investment fell by 16.3%. The sales area of commercial housing nationwide was 84.75 million square meters, down by 39.9%. Sales of commercial housing totaled 820.3 billion yuan (US$116.4 billion), down by 35.9%. Investment in the primary industry fell by 25.6%, investment in the secondary industry fell by 28.2%, and investment in the tertiary industry fell by 23%. Private investment was nearly 1.9 trillion yuan (US$269.7 billion), a year-on-year decrease of 26.4%. Investment in high-tech industries decreased by 17.9%, lower than the average decrease rate of total investment by 6.6 percentage points, of which investment in high-tech manufacturing and high-tech service industries fell by 16.5% and 20.8%, respectively. Investment in inspection services and professional technical services increased by 26.1% and 4.3%, respectively. Investment in the social sector decreased by 20%, of which investment in the health sector decreased by 11.2%, lower than the average decrease rate of total investment by 13.3 percentage points.

Sixth, market prices remained basically stable while the Consumer Price Index (CPI) and the Producer Price Index (PPI) diverged.

In the first two months of this year, China's CPI rose by 5.3% year-on-year. The prices of food, tobacco and alcohol increased by 15.6%, clothing increased by 0.5%, housing increased by 0.4%, daily necessities and services increased by 0.1%, transportation and communications decreased by 0.4%, education, culture and entertainment increased by 1.6%, and medical care increased by 2.2% while other supplies and services rose by 4.6%. Among food, tobacco and alcohol prices, grain prices rose by 0.6%, fresh vegetables rose by 13.8%, pork rose by 125.6%, and fresh fruit fell by 5.3% compared to the same period of last year. Taking out food and energy prices, the core CPI rose by 1.3%. The CPI saw a year-on-year increase of 5.4% and 5.2% in January and February, respectively, and rose by 1.4% and 0.8% month-on-month.

From January to February, the producer's price index for manufactured products in China fell by 0.2% year-on-year. The figure increased by 0.1% year-on-year in January, unchanged from the previous month, but fell by 0.4% year-on-year in February and decreased by 0.5% month-on-month. From January to February, the purchasing prices for industrial producers nationwide fell by 0.4% year-on-year.

Seventh, the surveyed unemployment rate rose, but employment of major groups remained generally stable.

From January to February, 1.08 million new jobs were created in cities and towns across the country. In February, the national surveyed unemployment rate in cities and towns was 6.2%, and the surveyed unemployment rate in 31 major cities was 5.7%. The surveyed unemployment rate of prime working aged people between 25 and59 years old was 5.6%, 0.6 percentage points lower than the average level of cities and towns across the country. The unemployment rate for people aged 20 to 24 with a junior college degree or above decreased by 0.4 percentage points from January. The average weekly working hours of employees in enterprises was 40.2 hours, a decrease of 6.5 hours from January. 

Eighth, China began to see trade deficit, but its trade structure continued to improve. 

From January to February, the total value of imports and exports of goods exceeded 4.1 trillion yuan (US$587.4 billion), a year-on-year decrease of 9.6%. Exports were more than 2.04 trillion yuan (US$290.7 billion), down by 15.9%. Imports were more than 2.08 trillion yuan (US$296.8 billion), down by 2.4%. The trade deficit was 42.6 billion yuan (US$6.1 billion). China's trade structure continued to improve. The share of general trade in total imports and exports was 60.6%, an increase of 0.3 percentage points over the same period last year. The share of imports and exports by private enterprises in total imports and exports was 41.9%, an increase of 1.3 percentage points over the same period last year. China's trade with ASEAN and countries along the Belt and Road maintained a growth trend, with imports and exports increasing by 2.0% and 1.8%, respectively. For the first time, the proportion of imports and exports with countries along the Belt and Road accounted for more than 30% of all of China's foreign trade. From January to February, the export delivery value of industrial enterprises above designated size in China reached nearly 1.36 trillion yuan (US$193 billion), a year-on-year decrease of 19.1%.

The COVID-19 outbreak left a big impact on China's economy in the first two months of 2020, but generally, the impact is short-term, external and controllable. The spread of the virus in China has been basically contained, proving that the control and prevention work has been effective. Fundamental living standards can be guaranteed, society remains stable, and the long-term positive and upward trend of the Chinese economy remains unchanged. Next, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will firmly implement decisions and arrangements from the CPC Central Committee and the State Council including a coordinated response to COVID-19 and measures to ensure social and economic development. While continuing to advance the epidemic control and prevention work, we will constantly aid enterprises in resuming work and production, ensure orderly flow of people and materials, enhance organic alignment of production, supply and sales, and balance imports and exports. By strengthening the hedging force of macro-policies, we will get microeconomic entities back to full steam to reduce the damage caused by the epidemic as much as possible and recover normal social and economic order while boosting stable and healthy economic development. 

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