CCTV:

The economic growth in the first quarter represents good momentum for economic recovery. Did this performance exceed expectations? What are the reasons behind this? Thank you.

Sheng Laiyun:

In the first quarter, China's GDP grew by 5.3% year on year. Many people believe this figure is higher than expected, but I'd like to elaborate on this a bit. First, China's 5.3% GDP growth portrays real-world conditions. From the perspective of calculation, the 5.3% GDP growth in the first quarter was mainly driven by improvement in industry and services. The industrial added value grew by 6% in the first quarter, marking a significant increase compared to the level of the same period last year and that during the fourth quarter. Mainly due to the recovery of exports and the adoption of a series of policies, the country saw increasing demand in the first quarter. Hence, the industrial sector achieved a sound performance. According to preliminary calculations, the 6% growth in the industrial sector contributed 37.3% to overall GDP growth, which promoted growth of the latter by nearly two percentage points. The service sector, due to the Spring Festival, made a larger contribution to GDP growth in the first quarter. As such, the service sector continued its rebound from a relatively high level last year. In particular, the contact-based service sector witnessed rapid growth. In the first quarter, retail sales of services grew by 10%, six percentage points higher than that of commodities. You must have noticed reports focused on this. According to data released by the Ministry of Culture and Tourism, the number of travelers and tourism consumption during the Spring Festival holiday exceeded the levels recorded during the same period in 2019, and the number of tourist trips increased by 34.3% year on year. The service sector has maintained a good momentum of development, with its contribution to economic growth being 55.7% in the first quarter. Industry and services contributed more than 90% of GDP growth. Based on calculations, the GDP growth in the first quarter was consistent with industrial recovery and the rebound of the service sector . 

Second, the 5.3% GDP growth was achieved on solid ground. The GDP is calculated by the production approach and verified by the expenditure approach. The three major demand indicators released today all witnessed stable rebound. Fixed-asset investment grew by 4.5% in the first quarter compared to the same period last year. This figure didn't deduct commodity prices, and the real growth rate would be 5.9% if commodity prices were deducted. Total retail sales of consumer goods increased by 4.7%, and exports rose by 5%. Based on calculations, the growth rates of the three major indicators were consistent with that of the GDP.

Third, the growth of physical indicators was consistent with the GDP growth. To evaluate China's economy, people tend to use freight volume or electricity generation volume for verification. In the first quarter, the total electricity consumption increased by 9.6%, with industrial electricity consumption rising around 8%. Freight volume grew by 5.3%, commercial passenger traffic increased by 20.5% and port cargo throughput increased by 6.1%. When it comes to exports, port freight volume is a very straightforward indicator. Additionally, the bank loan data that everyone follows also shows that the M2 balance at the end of March increased by 8.3% year on year. Given all this, we can see that the growth of physical indicators was consistent with the 5.3% GDP growth.

Of course, we also noticed that there were imbalances in economic recovery. GDP calculation is a combination of the added value of all industries, which is an indicator that reflects the overall situation. We can see that the recovery of consumption was not as well as production, and the recovery of micro, small and medium-sized enterprises (MSMEs) was not as good as large enterprises. As such, there were disparities in economic recovery, and people may also have different opinions when it comes to these figures. Going forward, we will pay closer attention to imbalances in economic development, especially the development of MSMEs, while reinforcing the basis for economic recovery.