China’s economy kicked off to a good start this year, through optimizing economic structure and improving people’s livelihoods. Due to initiatives to expand domestic demand and strengthen supply-side reform, efforts have been made to help the world’s second largest economy run smoothly.
Structural adjustment with growing consumption and service industry
Under the context of the New Normal, the nation’s economic growth mainly depends on consumption. In the first four months, total volume of retail sales increased 10.3 percent year on year, and contribution rate of consumption rose 22 percent compared with the same period in 2015.
Amid structural transformation, the service industry became the largest in the country. Service industry production index witnessed an 8.3 percent year-on-year growth in April.
In the first quarter, the tertiary industry increased 7.6 percent, 1.8 percentage points faster than the secondary industry. Accounting for 56.9 percent of GDP, the contribution rate of tertiary industry to economic growth reached 63.5 percent, 29.3 percentage points higher than the secondary industry.
Furthermore, tax revenue from the service industry grew 12 percent and accounted for 56.5 percent of all tax revenue.
Reform efforts to stimulate market
Reform initiatives, including streamlining administration and delegating power to lower-level governments, optimizing administrative services, investment approval and business systems reform, value-added tax reform, and supply-side reform, are working together to inject dynamism into the market.
From January to April, the number of newly registered enterprises reached 1.57 million, a 27.5 percent year-on-year growth. Nearly 13,000 enterprises were registered each day over the past four months.
Supply-side reform efforts to address overcapacity, reduce inventory, deleverage and lower costs have been paying off, too.
In the steel and coal industry, for example, raw steel production decreased 2.3 percent year on year, while raw coal production decreased 6.8 percent in the first four months.
On May 1, the business tax was replaced by value-added tax. It is estimated that tax burdens equal to 500 billion yuan ($76.6 billion) will be saved for enterprises this year.
New economies with innovation-driven development
Initiatives such as Internet Plus and Made in China 2025 pushed forward mass entrepreneurship and innovation.
Innovation achievements saw a dramatic increase as domestic invention patents grew 63 percent in the first four months.
High-tech and equipment manufacturing industries and online sales saw robust growth. In addition, new products saw vigorous development as year-on-year production increases in new energy vehicles, sport utility vehicles, smart TVs, opto-electronic devices, industrial robots, and smart phones reached 92.5 percent, 47.3 percent, 25 percent, 22.4 percent, 24.7 percent, and 10.8 percent.
Favorable environment created with proactive policies
To cope with the downward pressure, instead of taking strong stimulus measures, efforts have been made in macroeconomic regulation and control.
From January to April, national general public budget revenue increased 8.6 percent year on year. Seventy percent of investments within the central budget have been implemented, allocating limited funds to the sectors of public service and product, environment protection, and new industries.
In the first four months, investment in water conservancy, transportation, and information infrastructure increased 19 percent year on year, while investment in service and high-tech industries grew 12.4 percent and 15.1 percent.
Monetary policies are good, and money supply increase rate fell. At the end of April, broad money (M2) balance increased 12.8 percent year on year. In general, money and credit supply and social financing scale remain stable.
Employment, price, and people’s income stable
Employment and people’s income are priorities of economic development. A total of 1.25 million urban jobs were created in April, while the figure for the first four months reached 4.43 million, accomplishing 44 percent of this year’s target. At the end of March, registered unemployment rate was slightly lowered to 4.04 percent.
Consumer prices increased 2.2 percent year on year in the first four months but still are at a stable position.
People’s income saw growth, as in the first quarter, per capita disposable income reached 6,619 yuan, an 8.7 percent year-on-year growth.