Reuters:

How do you predict the economy will perform in the first quarter? From a consumption perspective, do you think we can see the effects of the policies to boost consumption? And what impact will the U.S. tariffs have on China's economy going forward? Thank you.

Fu Linghui:

Thank you for your questions. Amid the complex environment, everyone is paying more attention to the situation in the first quarter. In January and February this year, it can be said that the effect of macro policies continued to emerge, the economy started off smoothly, and the development trend took a new turn for the better. Judging from recent developments, although the external environment has become more complex and severe, unilateralism and protectionism have intensified, global monetary policies have become divergent, the risk of volatility in the international market has increased, domestic demand has been weak, and some companies have encountered difficulties in production and operation, the long-term positive trend of the Chinese economy has not changed. China has obvious advantages in terms of its enormous market, complete industrial system and abundant human resources. There is broad incremental space for upgrading demand, optimizing the structure and transforming old growth drivers into new ones. Both existing policies and incremental policies continue to be effective. The economy is expected to maintain a generally stable development trend with steady progress in the first quarter. The specific aspects are as follows:

First, the economy has continued to recover. In the first two months, production and supply grew steadily, consumption and investment rose steadily, and the growth rates of most major indicators were faster than the whole of last year, laying a good foundation for a promising start for the Chinese economy in the first quarter. In the first two months, the value added of industrial enterprises above designated size grew by 5.9% year on year, 0.1 percentage point higher than the whole of the previous year. The Index of Services Production grew by 5.6% year on year, 0.4 percentage point higher than the previous year. Investment in fixed assets grew by 4.1%, 0.9 percentage point higher than the whole of the previous year. Total retail sales of consumer goods increased by 4%, 0.5 percentage point higher than the previous year. These main indicators show a steady upward trend.

Second, domestic demand is expected to gradually expand. In terms of consumption, recently, the General Office of the CPC Central Committee and the General Office of the State Council issued a special action plan to boost consumption. All localities and government departments have successfully launched measures to boost consumption and benefit the public. By making greater efforts to promote consumer goods trade-in programs in more areas and innovating diversified consumption scenarios, these initiatives are expected to drive the steady growth of consumption. In terms of the consumer confidence index, the February index was 0.9 percentage point higher than the previous month, rising for the third consecutive month. In terms of investment, all parties have increased their efforts to stabilize investment, strengthening support for projects, funds and other production factors. They have also increased investment in infrastructure related to people's lives and innovation, which is conducive to continuous investment growth. In the first two months, infrastructure investment rose 5.6% year on year, an acceleration of 1.2 percentage points from last year. Investment in high-tech industries grew by 9.7%, significantly outpacing overall investment growth.

Third, the effects of macroeconomic policies continue to be evident. Greater efforts have been made to promote large-scale equipment renewal and consumer goods trade-ins, and these policies have continued to take effect. Based on the situation in the first two months, driven by the expansion of consumer goods trade-ins, retail sales of household appliances and audio-visual equipment, furniture, stationery and office supplies and communication equipment by enterprises above designated size all posted double-digit growth. With large-scale equipment renewal driving growth, purchase of equipment and instruments rose 18%. The gradual implementation of more proactive fiscal policies and a moderately accommodative monetary policy will support sustained economic recovery and improvement.

Fourth, market expectations and confidence have improved. With macroeconomic policies yielding positive results, the economy is recovering and trending upward. The property and stock markets have exhibited positive changes, and breakthroughs in cutting-edge technological fields like domestic large-scale AI models and humanoid robots have boosted social confidence. In January and February, the real estate market continued to exhibit a stable trend, while transaction volume and turnover on the Shanghai and Shenzhen stock exchanges maintained rapid growth. The expectations of business entities continued to improve. In February, the manufacturing PMI increased significantly, and the non-manufacturing business activity index remained within the expansionary range. These positive changes contribute to the expansion of production and demand, and help promote the smooth circulation of the economy.

Overall, despite facing certain risks and challenges, China's economic fundamentals remain sound, with multiple advantages, strong resilience, and significant potential. The supporting conditions and fundamental trends for long-term sound economic development remain unchanged. As macroeconomic policies continue to take effect, the economy in the first quarter is expected to maintain overall stability and make steady progress. Thank you.