New Phenomena and Observations on the Current Chinese Economy
By mid-2023, the Chinese economy will attract worldwide attention.
In the first half of this year, the overall operation of the Chinese economy showed a recovery and improvement trend, with market demand gradually recovering, production and supply continuing to increase, employment and prices generally stable, and household income steadily increasing, promoting high-quality economic development with sustained efforts. However, since the second quarter, the growth rate of some monthly economic indicators has declined, and there have been temporary fluctuations in the development of some areas.
There have been some different views and voices both domestically and internationally regarding the trend of the Chinese economy. How to view the new phenomena and changes presented by the Chinese economy? Xinhua News Agency reporters conducted in-depth interviews and research with authoritative departments and grassroots frontlines for observation and analysis.
What is the current economic recovery trend after the growth rate of some indicators has fallen?
In the first half of this year, the Chinese economy embarked on an unusual recovery curve——
With the comprehensive restoration of normal economic and social operations, the economy rebounded in the first quarter and achieved a good start; In the second quarter, the recovery trend continued, but the growth rate of multiple indicators such as exports and industrial profits slowed down, and economic activity weakened.
The argument that China's economic recovery is weak has emerged. On the other hand, since the second quarter, international organizations such as the United Nations and the World Bank have raised their expectations for China's economic growth this year, demonstrating confidence in China's development prospects.
How to correctly view the current situation of China's economic recovery in the face of economic downturn pressure and complex public opinion environment?
"This is a different recovery from the past, and there is an imbalance in the recovery," said Liu Yuanchun, President of Shanghai University of Finance and Economics.
In the midst of a slowdown in global economic growth, the Chinese economy has maintained a stable trend.
Looking at the world, geopolitical tensions are intensifying, global inflation is on the rise, and the US and European central banks are continuing to tighten monetary policy... The International Monetary Fund predicts that the global economic growth rate will hover around 3% in the next five years, at a low level in nearly 30 years.
Looking at China again, the recovery growth trend in the first half of the year is obvious——
In the first half of the year, the gross domestic product (GDP) increased by 5.5% year-on-year, significantly faster than the economic growth rate of 3% for the entire year last year and also faster than the economic growth rate of 4.5% in the first quarter; The total retail sales of consumer goods increased by 8.2% year-on-year, 2.4 percentage points faster than the first quarter. The contribution rate of final consumer spending to economic growth reached 77.2%, significantly higher than last year; The three industries continue to recover, employment and prices remain generally stable, and the scale of foreign exchange reserves remains stable at over 3.1 trillion US dollars. The industrial structure continues to optimize and upgrade, and the new driving force for high-quality development continues to strengthen.
But specifically, the foundation of recovery is not yet stable, and further efforts are needed to promote the sustained recovery and improvement of the economy.
The total demand is still insufficient, and economic transformation and upgrading face new obstacles; The total employment pressure and structural issues cannot be ignored, and the employment pressure on young people is still relatively high; The profits of industrial enterprises have declined, some small and medium-sized enterprises in certain industries are facing operational difficulties, prices continue to operate at low levels, and real estate development and construction are still relatively sluggish
Taking exports, one of the three driving forces for economic growth, as an example, in May this year, due to factors such as the rapid increase in base during the same period last year, China's export growth rate turned from positive to negative year-on-year, and downward pressure on external demand emerged.
Zhuang Rui, Executive Director of the Institute of International Economics at the University of International Business and Economics, believes that the global economic recovery lacks momentum, and developed economies such as the United States and Europe have seen a significant decline in growth rates. The overall weak external demand has had an impact on China's foreign trade.
Liu Yuanchun said that the recovery in the post pandemic period is phased, especially during the transition from social recovery to economic and profit recovery, and then to balance sheet recovery. It is normal for some indicators to fluctuate, fine-tuning indicators, and expected fluctuations to occur.
To understand the Chinese economy, one must not only see the short-term "shape" but also understand the long-term "trend".
"In the current economic recovery, the direction of high-quality development has always been unwavering." Li Yuju, deputy director of the Xi Jinping Economic Thought Research Center, said that China's economy is in a stage of development from quantitative change to qualitative change. We should not only focus on changes in quantity and speed, but also on qualitative changes.
The scene of the 20th millionth offline event of China's new energy vehicles was filmed at Guangzhou GAC Aian First Intelligent Manufacturing Center. Photo by Xinhua News Agency reporter Deng Hua
On July 3rd, Guangzhou GAC Aian First Intelligent Manufacturing Center. Amidst the dazzling lights, a beautifully designed new energy vehicle slowly drove out of the production line, marking the production volume of new energy vehicles in China reaching 20 million units.
"This is of great significance for the growth of China's automobile industry chain, automobile exports, and industrial upgrading of the manufacturing industry," said Cui Dongshu, Secretary General of the National Passenger Car Market Information Joint Conference.
In the first half of the year, the added value of the equipment manufacturing industry increased by 6.5%, 2.7 percentage points faster than all industries above designated size; Investment in high-tech industries increased by 12.5%; The production index of information transmission, software, and information technology services increased by 15.4%; The production of new energy products such as new energy vehicles, solar cells, and charging piles increased by 35%, 54.5%, and 53.1% respectively. The export of "new three types" products represented by lithium batteries, solar cells, and electric passenger vehicles increased by 61.6%... Multiple indicators indicate that the Chinese economy is continuously transforming and upgrading in response to pressure.
At SAIC Times Power Battery System Co., Ltd. located in Liyang, Changzhou, Jiangsu, workers are conducting battery production in the workshop. Photo by Xinhua News Agency reporter Li Bo
The more critical the moment is, the more we need to strengthen our confidence and move forward in a consistent manner.
In order to do a good job in economic work for 2023, the Central Committee of the Communist Party of China has made a series of decisions and deployments, and various regions and departments have effectively implemented them, promoting the Chinese economy to overcome difficulties and implementing the primary task of high-quality development in detail.
Meng Wei, spokesperson for the National Development and Reform Commission, stated that although the current market demand is insufficient and the endogenous driving force needs to be strengthened, these pressures and challenges will not change the long-term trend of China's economy.
The participants of the 14th Summer Davos Forum exchanged ideas within the new leader village set up by the forum. Photo by Xinhua News Agency reporter Sun Fanyue
The recently concluded 14th Summer Davos Forum has conveyed a confident and powerful voice from China - expected growth target of around 5% for the whole year.
"The current global development is facing many challenges, and at this critical moment, the economic development goals set by China have brought positive signals to the world economy," said Schwab, President of the World Economic Forum.
What is the driving force behind the recovery from insufficient market demand?
At present, China's economy is recovering and improving, but problems such as insufficient market demand and weak endogenous driving force have become apparent.
"The recovery process of investment and consumption has fallen short of expectations," "the consumption capacity of residents has declined," and "private investment is sluggish." Recently, there has been a lot of discussion around the issue of China's economic demand.
Domestic demand is the main engine of economic growth. From short-term indicators, the recovery rate of demand has indeed slowed down compared to the first quarter.
Let's first look at the consumption. Looking across the country, popularity is recovering and fireworks are rising: "Zibo Barbecue" is becoming popular and popular; The Guizhou "Village Super" football tournament has become a "phenomenal" rural carnival; Scenic spots and commercial districts across the country are once again bustling with people, hotel bookings are tight, and movie box office has increased significantly
In the first half of the year, the total retail sales of consumer goods increased by 8.2% year-on-year, with an accelerated growth rate compared to the first quarter, and there was a significant recovery in residents' contact based aggregation service consumption.
But the foundation for consumer recovery is not yet solid. In June, the growth rate of total retail sales of consumer goods in society has slightly declined year-on-year. Despite the influence of factors such as the same period base last year, it also shows that residents' consumption willingness and consumption ability need to be improved.
We should maintain a rational and objective perspective on the process of consumer recovery. Liu Guoqiang, Vice President of the People's Bank of China, analyzed that it takes time for consumption and economic recovery to recover after the epidemic internationally, and it is generally believed that it will take about a year to restore normalcy. The COVID-19 situation in our country has remained stable for only about half a year, and there has been a positive improvement in the economic cycle, household income, consumption, and other aspects.
Looking at investment again. In the first half of the year, fixed assets investment increased by 3.8% year on year. Among them, infrastructure investment increased by 7.2%, major projects in the fields of railways and water conservancy were accelerated, and investment in high-tech industries maintained high growth.
Due to factors such as declining profitability of some enterprises and unstable market expectations, expanding investment is also under pressure. In the first half of the year, the growth rate of national fixed assets investment showed a downward trend, and private investment fell 0.2% year on year.
It should also be noted that the drag on real estate development investment is one of the important reasons for the overall slowdown in investment growth. If real estate development investment is excluded, private investment still maintains a rapid growth. In the first half of the year, private project investment increased by 9.4% year-on-year, which is 5.6 percentage points higher than the total investment.
Further expanding domestic demand is the key to promoting sustained economic recovery and improvement.
On July 1st, in Shangqiu, Henan, the "Suiyang Twenty Four Blocks" light cultural and tourism project, which integrates catering, cultural and creative activities, performing arts, and Hanfu shows, opened. The night market is brightly lit and bustling with crowds. The stage is filled with good performances, notes flow, and various specialty foods along the street are fragrant, making people linger and forget to leave.
"Seeing the atmosphere so good, I took my family out for a walk and tasted the food and watched the performance together. It felt really good," said Mr. Wang, a citizen.
Tourists can purchase goods at the duty-free store of China Duty Free Group Haikou Sun Moon Plaza. Photo by Yang Guanyu, journalist from Xinhua News Agency
Around promoting consumption, various regions have launched various measures: Hainan has issued 20 million yuan duty-free shopping vouchers, Shanghai has launched a summer consumption carnival for the "2023 Summer Consumption Season", and Anhui plans to carry out approximately 1500 consumption promotion activities in the third quarter
Focusing on the consumption of new energy vehicles, various departments have recently launched a "combination punch": clarifying the extension of vehicle purchase tax reduction and exemption policies until the end of 2027, further building a high-quality charging infrastructure system, and launching new energy vehicle rural activities
Home consumption involves multiple fields, long upstream and downstream chains, and a large scale. The State Council executive meeting held on June 29th reviewed and approved the "Several Measures to Promote Home Consumption", and targeted measures were taken to boost it.
At the Shanghai Hongqiao Business District Bonded Logistics Center, staff are transporting cross-border e-commerce goods. Photo by Xinhua News Agency reporter Ma Ning
The latest data shows that the e-commerce logistics index in China increased by 1.1 points in June compared to the previous month, and the potential for online and offline consumption is effectively being released. In June, China's commodity index rose month on month for two consecutive months, and the commodity market ushered in a development trend of both supply and demand.
"With the arrival of peak consumer seasons such as summer, residents' demand for holiday leisure shopping, travel and other consumption will be further released," said Shu Jueting, spokesperson for the Ministry of Commerce.
Stable investment requires efforts from various regions and departments.
In early July, walking into the construction site of Ganfeng New Lithium Battery Technology Industrial Park in Liangjiang New Area, Chongqing, tower cranes stood tall and trucks shuttled back and forth, creating a bustling atmosphere. The fixed assets investment of the project exceeds 5 billion yuan, and the annual output value is expected to reach 20 billion yuan after the overall use. At present, 90% of the first phase project has been capped.
"The company has sufficient technological reserves and is optimistic about long-term market demand around the development direction of power batteries," said Peng Lin, the project leader of the industrial park.
Accelerate the implementation of 102 major projects in the 14th Five Year Plan, and promote the participation of private capital in the construction of national major projects; Shanghai has introduced several policy measures to increase support for the development of private investment, and Shaanxi has launched ten measures to promote the healthy development of private investment... A series of real and practical measures are focused on stimulating the vitality of private investment.
Tourists are visiting the Xi'an Datang Night City Pedestrian Street. Photo by Xinhua News Agency reporter Zou Jingyi
The super large scale market and huge potential for domestic demand mean strong resilience and broad room for economic development. We need to have firm confidence and patience in restoring domestic demand.
"With the further effectiveness of consumption promotion policies, the driving force of consumption on the economy will continue to emerge. At the same time, infrastructure investment and manufacturing investment have certain resilience and will gradually play a role in expanding domestic demand," said Fu Linghui, spokesperson for the National Bureau of Statistics.
How to deal with the contradiction of high unemployment rate and employment pressure?
Since the beginning of this year, with the overall recovery of the economy, the employment situation has been continuously improving and maintaining overall stability. In June, the unemployment rate of the main employment group aged 25 to 59 was 4.1%, which is lower than the level in 2019 before the epidemic. But the unemployment rate among urban youth aged 16 to 24 surveyed is 21.3%, the highest in recent years.
The seemingly contradictory two sets of data reflect the new changes in China's employment situation - the overall stability of the employment market, but the pressure on urban employment remains high, and the task of promoting employment for key groups such as college graduates is arduous. The structural employment contradiction between the mismatch between human resource supply and job demand is even more prominent.
Job seekers are checking job information at the 2023 National Large and Medium sized City Tour Recruitment Event for the Future of Employment. Photo by Xinhua News Agency reporter Feng Kaihua
Xiao Xiao, a undergraduate graduate majoring in Business Administration from a university in Henan, told reporters that he and some of his classmates have not yet found suitable jobs. "There are indeed many enterprises on the job fair. I mainly want to go to large enterprises such as Internet companies, but the competition for these positions is very fierce. In addition, because the epidemic situation in the last two years has not allowed offline internship, I also lack advantages in job hunting."
Mr. Li, the general manager of a valve enterprise in Xingyang City, Henan Province, as an employer, is worried about the difficulty of recruitment. "After the technological transformation of enterprises, the requirements for personnel quality have significantly increased, and there is a lack of professional and technical talents such as high-end motor research and development. Those with low education cannot do it, while those with high education cannot come."
This year, there are 16.62 million new growing laborers who need to work in urban areas, and 11.58 million college graduates, both reaching new highs in recent years.
"The intensification of competition and changes in young people's career choices have made it difficult for job seekers to find positions that match their demands," said Feng Lijuan, chief human resources expert at 51job.
Some college students and older and lower skilled workers find it difficult to find employment, while some industries and enterprises face a shortage of high skilled and compound innovative talents.
Some manufacturing companies in Guangdong, Jiangsu and other regions have reported to reporters that frontline general workers have not been as difficult to recruit as they were in the previous two years since the beginning of this year, but there is a significant shortage of professional and technical personnel. With the acceleration of transformation and upgrading, this contradiction has become more prominent.
"The mismatch between the education structure, employment concept, and market demand of workers further exacerbates the structural employment contradiction," said Mo Rong, President of the Chinese Academy of Labor and Social Security Sciences.
While firmly stabilizing the employment foundation, we should pay attention to the changing trends of the main contradictions in the employment field, take practical measures to promote supply-demand balance, and promote high-quality and full employment.
Not long ago, the State Council issued relevant notices and launched a series of stable employment policy measures. Guided by the implementation of the employment priority strategy, various regions have increased policy implementation efforts and made every effort to stabilize the stock, expand the quantity, and improve the quality.
Recently, Zhonghuan Leading Semiconductor Materials Co., Ltd., which has nearly 400 employees, received 165000 yuan in stable employment return funds from the human resources and social security department of Hohhot City. "Without any application, the money was directly transferred to the company account, which is a great encouragement for us to maintain stable employment and continue to develop," said Wang Yanjun, the company's general manager.
Provide unemployment insurance and stable job returns to enterprises that do not lay off employees but reduce layoffs; The policy of reducing unemployment and work-related injury insurance rates will continue until the end of 2024, with an expected annual reduction of approximately 180 billion yuan in burden; Supporting financial institutions to provide stable and expanded financial services... A package of measures helps enterprises alleviate pressure and incentivizes them to create more high-quality jobs in their development.
Shaanxi will allocate 70% of the vacant positions in public institutions to recruit college graduates. Yunnan has introduced 17 measures to promote the employment and entrepreneurship of college graduates. Jiangsu will strive to collect no less than 10000 positions with a monthly salary of 6000 yuan or more per week in the province by the end of September. Various regions will strive to expand channels and focus on promoting more comprehensive and high-quality employment for college graduates.
Improving the labor skills of workers is the key to alleviating structural employment contradictions.
The Ministry of Human Resources and Social Security is recruiting 1 million employment internship positions nationwide, and plans to organize vocational skills training for more than 15 million people by 2023; Shaanxi requires that employment skills training be provided to college graduates during their academic years, and training should increase employment guidance... Accurate measures should be implemented from the central to local levels to continuously enhance the job seeking and career selection abilities of workers.
Fundamentally speaking, solving employment problems still relies on development.
Vigorously developing advanced manufacturing clusters and national strategic emerging industry clusters, promoting the transformation and upgrading of traditional industries and the cultivation and growth of emerging industries, will effectively enhance the driving effect of economic growth on employment.
"In the next stage, as the economy continues to recover and the demand for employment continues to expand, coupled with the sustained effectiveness of employment stabilization policies, there is good support for maintaining overall stability in employment," said Fu Linghui.
How to make efforts to maintain supply and stable prices while maintaining low levels of operation?
Since the beginning of this year, the national economy has steadily recovered, but domestic prices have continued to operate at a low level, forming a significant contrast with economic growth, and even raising concerns about the economy falling into deflation.
Data shows that in the first half of the year, the national consumer price index increased by 0.7% year-on-year, with the growth rate remaining below 1% for four consecutive months; The national industrial producer price index decreased by 3.1% year-on-year, and the decline has expanded for consecutive months.
The reporter walked into the main supply base of Hunan's "vegetable basket" - the Red Star Global Agricultural Products Wholesale Center. The meat trading area was busy, and recently, meat products such as white pigs, which have been on the market in large quantities, were sold to the whole province with the arrival of vehicles.
"At present, the wholesale average price of white pigs in the market is 20 yuan/kg, a year-on-year decrease of 23%." Zhang Yong, Director of the Information and Digitalization Center of Red Star Global Agricultural Products Wholesale Center, said that although the supply of live pigs and pork is relatively sufficient this year, the demand is relatively weak, leading to a sustained low pig price and driving down the rise in CPI.
"At present, domestic production is accelerating its recovery, logistics is continuously strengthening, and product supply is sufficient. However, after the economy and society fully resume normal operation, it will take some time for consumer demand to recover." said Wang Likun, Deputy Researcher at the Market Economy Research Institute of the Development Research Center of the State Council.
In addition to the time difference between supply and demand recovery, the base effect is also a major reason for the decline in CPI growth.
Last year, due to the crisis in Ukraine and other factors, food and energy prices were relatively high, resulting in a relatively low increase in data for this year. Prices of fresh vegetables, gasoline and diesel have fallen significantly, significantly lowering the CPI increase.
In view of China's low CPI, the Lianhe Zaobao of Singapore quoted relevant analysis and said, "We should take this rational view, and the low inflation level has left more and greater room for macroeconomic policies to stabilize growth, employment and prices".
PPI is directly related to corporate benefits. The continuous decline in PPI this year is the result of multiple factors both domestically and internationally.
On the one hand, the sluggish growth of the world economy and the overall downward trend in prices of international energy and other commodities have gradually revealed their impact on China's imports. In June, the prices of domestic oil and gas extraction industry decreased by 25.6% year-on-year.
On the other hand, some industries have insufficient domestic market demand and lack motivation for price recovery. Industries such as steel and building materials have sufficient production capacity, while market demand is still recovering. In June, the prices of black metal smelting and rolling processing industries decreased by 16% year-on-year.
The widening decline in PPI has increased the operational pressure on industries such as commodities. In June, the Purchasing Managers Index of China's manufacturing industry continued to be in a contraction range.
Enterprises are actively taking action. "The recent decline in crude oil prices has narrowed the profit margins of the refining and chemical industry, putting heavy pressure on the production and operation of refined oil, chemical products, and by-products." Liu Wenbao, Manager of the Production Planning Department of Sinopec Jinling Petrochemical Company, said that the company has started to reduce operating costs by reducing crude oil procurement costs, energy consumption, and other aspects. The company has also optimized and adjusted its product structure to meet market demand, increased the production and supply of aviation kerosene, high-end graphite materials, and other products, and worked hard to explore new growth points for benefits.
The policy is continuously intensifying. From accelerating the construction of charging piles, energy storage facilities, and supporting power grid renovation, to promoting green intelligent home appliances and green building materials to rural areas, focusing on the demand side, a series of practical measures are committed to promoting industrial product prices back to a reasonable level.
At the welding assembly workshop of Chongqing Yongchuan Production Base of Great Wall Motors, intelligent welding robots are performing welding operations. Photo by Xinhua News Agency reporter Huang Wei
Stable growth in key industrial sectors is a key focus. For pillar industries such as machinery, petrochemicals, and automobiles, the Ministry of Industry and Information Technology is implementing policies and formulating measures according to different industries to strengthen policy supply.
Wang Likun stated that with the implementation of detailed policies and measures to boost industrial economic development, enterprise production and operation are steadily advancing, industrial product demand is gradually recovering, and the cumulative base effect is weakening. PPI is expected to moderately rebound in the second half of the year.
Xinhua News Agency, Beijing, June 14th, title: To guide the right direction for the development of international human rights -- President Xi Jinping's congratulatory letter to the Global Human Rights Governance High-end Forum triggered a warm response Xinhua News Agency reporter "China is willing to work with the international community to implement the Vienna Declaration The spirit of the" Program of Action "promotes the development of global human rights governance in a more fair, just, reasonable and inclusive direction, and promotes the construction of a community with a shared future world." On June 14, President Xi Jinping sent a congratulatory letter to the high-end forum on global human rights governance, which triggered a warm response from Chinese and foreign guests. They said that President Xi Jinping's congratulatory letter put forward China's propositions on the development of the international human rights cause and global human rights governance, and clarified China's vivid practice of implementing the spirit of the Vienna Declaration and Program of Action and respecting and protecting human rights.
June 11th is China Population Day. Population development is a major event related to the great rejuvenation of the Chinese nation. The first meeting of the 20th Central Financial and Economic Commission recently stressed that Chinese path to modernization should be supported by high-quality population development. The meeting proposed to regard the construction of an education strong country as a strategic project for high-quality population development, comprehensively improving the scientific and cultural quality, health quality, and ideological and moral quality of the population. High quality scientific and cultural supply is continuously improving the scientific and cultural literacy of the people. The report of the 20th National Congress of the Communist Party of China clearly proposes to "strengthen youth sports work". Rock climbing, baseball, running, ice sports... Sports activities are gradually being added to students' schedules and becoming an essential part of their learning and life. The 14th Five Year Plan for Cultural Development points out that improving families and schools
Xinhua News Agency, Beijing, June 9th (Xinhua) -- The overall stability of domestic prices -- Interpretation of May CPI and PPI data. Xinhua News Agency reporters Wei Yukun and Han Jianuo released data on June 9th, showing that consumer demand continued to recover in May, with the national consumer price index rising by 0.2% year-on-year, an increase of 0.1 percentage points from the previous month; Excluding food and energy prices, the core CPI increased by 0.6% year-on-year, and the overall operation of domestic prices remained stable. In China's CPI basket of goods, food accounts for a relatively high proportion. In May, food prices increased by 1% year-on-year, an increase of 0.6 percentage points compared to the previous month. Among them, the prices of poultry, edible oil, and fresh fruits have increased by 5.6%, 3.6%, and 3.4% respectively, with all increases falling back; The price of pork has decreased from a 4% increase last month
Everyone said that on the new journey of comprehensively promoting the great rejuvenation of the Chinese nation, we should be firm in cultural self-confidence, take on the mission, and work hard to learn rich nutrition from the excellent traditional Chinese culture, refine and sublimate in the great practice of Chinese path to modernization, so that the Chinese civilization can glow with new vitality and vitality, and inject strong civilization nourishment and spiritual strength into the construction of a strong country and national rejuvenation. The cultural and national fortunes are intertwined, and the cultural context is connected to the national context.
The National Version Museum of China has undergone three years of construction and was completed on July 23, 2022