Guo Liyan: Policy coordination and linkage to support balanced economic recovery and growth rate | Industry | Economy

The latest data released by the National Bureau of Statistics shows that in May, the profits of industrial enterprises above designated size in China decreased by 12.6% year-on-year, a decrease of 5.6 percentage points compared to the previous month, narrowing for three consecutive months and showing a steady recovery trend month by month. Among them, the manufacturing industry, especially the equipment manufacturing industry, has maintained a rapid growth in profits, driving a 4.6 percentage point increase in industrial profits above designated size, making it the industry that currently contributes the most to improving industrial profits. This can also be confirmed by the contribution rate to the growth of large-scale industries. In the first five months, the added value of the equipment manufacturing industry increased by 6.8% year-on-year, with a contribution rate of over 70%. From the perspective of emerging industries, the production and sales of new green commodities have flourished, driving corresponding double-digit growth in manufacturing profits. The steady improvement of industrial profits is conducive to enhancing confidence, boosting expectations, and promoting the expansion of reproduction through increased income and consumption, thereby driving the entire economic cycle.

The recovery and improvement of the service industry is a prominent highlight of the current economic operation. The added value of the service industry in the first quarter increased by 5.4% year-on-year, and it is expected that the growth rate in the second quarter will further expand. Its contribution to GDP growth has expanded to around 70%, which is an important force supporting economic recovery and growth. Mainly, the contact service industry has significantly improved. In the first five months, the national service industry production index increased by 9.1% year-on-year, which is 0.7 percentage points faster than the first four months. According to data released by the Ministry of Culture and Tourism, the number of domestic tourism trips during the Dragon Boat Festival holiday exceeded 100 million, which is 1.1 times higher than the same period in 2019. In addition to accommodation, catering, and cultural tourism consumption, the production and sales cycle of the footwear and clothing market has also significantly accelerated, and profitability has improved significantly, becoming one of the important factors driving the narrowing of profit decline in the consumer goods manufacturing industry.

Based on the forecast results of the development trends of the service industry and industry, it is expected that the GDP growth rate in the second quarter will significantly expand compared to the first quarter, and the expected growth target of around 5% is expected to be achieved throughout the year. Objectively speaking, there are still some pressure points in internal and external demand. On the one hand, the external environment is becoming more complex, and the pressure of external demand contraction is still significant. According to the latest forecast by the International Monetary Fund, the growth rate of developed economies has significantly slowed down this year, with an expected average growth rate of only 1.3%, which may cause some interference to China's stable foreign trade. On the other hand, domestic demand is still significantly insufficient, and due to multiple factors, the recovery of relevant indicators in the real estate market has slowed down recently. The recovery of retail sales of residential consumer goods such as household appliances, furniture, and architectural decoration is relatively slow. In response to this, the housing loan interest rate in late June once again decreased, covering new and existing loans, first and second home loans. At the same time, some places supported the orderly release of demand for rigid and improved housing by relaxing purchase restrictions and optimizing housing provident fund policies.

Overall, in the first half of the year, the foundation for economic recovery continued to consolidate, and there was a significant increase in positive factors supporting balanced economic recovery. Recently, international institutions have continued to raise China's economic growth expectations for this year, leading to an increase in the number of foreign-invested enterprises in China. Many multinational companies have newly established or added production lines, and have placed industrial sectors with higher added value in China. This indicates that they attach great importance to the opportunities in the Chinese market and have significantly increased their expectations for the recovery of the Chinese economy.

Looking ahead to the second half of the year, we will focus on promoting the sustained consolidation and recovery of the economy, increasing the intensity of macroeconomic policy regulation, promoting the coordination and linkage of various regulatory policies, and maximizing the comprehensive effects. As for the service industry, it is expected to enter an accelerated development period on the basis of rapid recovery. The urgent need for deep integration of manufacturing and service industries, as well as green and low-carbon transformation, will promote the expansion and structural optimization of productive service industries. Diversified and better life needs will also guide the improvement of the quality of life service industries. The key is to further break down some implicit barriers in market access and licensing, and focus on promoting the potential release and balanced development of the service industry. As far as the manufacturing industry is concerned, it is necessary to promote high-end and green upgrading and transformation, as well as increase support for labor-intensive manufacturing, better combine stable employment and stable industries, improve the professional skills of workers, optimize the working environment and labor security conditions, so that industrial workers have more decent jobs, and attract more young people to work in the manufacturing industry. In addition, for the possible impact of adverse weather such as high temperature in summer and local rainstorm on production and circulation, it is necessary to track and warn in time, enhance emergency response capability, and ensure stable production and supply of important livelihood commodities and basic energy.

For continuously enhancing the endogenous driving force of economic development, the key lies in promoting consumption and stabilizing subject expectations. On the one hand, it is necessary to implement the various measures that have been introduced to support the expansion of consumption in detail, provide more diverse and high-quality goods and services for different income groups, better match the diverse consumption needs of residents, including promoting the transformation and upgrading of consumer goods industries such as shoes and clothing, developing towards branding and high-end quality, innovating consumer service scenarios, and vigorously promoting consumption of health related services. On the other hand, it is necessary to further create a fair, transparent, and expected stable institutional environment, maintain policy stability and continuity, expand the development space of the private economy, boost the confidence of private enterprises in development, and enhance their role in exploring employment opportunities and optimizing employment structure. By stabilizing employment and promoting income growth, consumption can accelerate recovery.