Ning Jizhe, Director of the National Bureau of Statistics, answers questions from the media on China’s economic performance in 2016 at a press briefing held by the State Council Information Office on January 20
On January 20, Ning Jizhe, Director of the National Bureau of Statistics, commented on China's economic performance in 2016 at a press briefing held by the State Council Information Office. Ning answered questions from the media on topics including China's economic slowdown, the rising debt ratio, property market and income disparity. An edited translation of the interview follows:
GDP growth of 6.7 percent—especially the rate of 6.8 percent in the fourth quarter last year—may draw considerable attention throughout the country. With supply-side structural reform being pursued in order to change the industrial landscape and the goals of economic transformation set as early as the end of the last century, is 2016 supposed to be a watershed year marking the evolution of the Chinese economy?
Ning Jizhe: The Chinese economy has progressed to the phase known as the "new normal". A growth of 6.7 percent is reasonable, as it was earlier estimated to grow between 6.5 and 7 percent. It could be called mid- to high-speed growth, and it remains high compared to the rest of the world. According to the International Monetary Fund (IMF), the Chinese economy was expected to grow 6.7 percent in 2016, while India was to achieve 6.6 percent. The growth of the Chinese economy last year probably remained the highest in the world. As the second largest economy in the world, our GDP has amassed $11 trillion, a basis on which an increase of 1 percentage point would result in colossal output levels.
The growth is especially significant considering that China has undertaken economic structural advancement as well as a change in economic model. In view of structural reform, the contribution of the service industry to GDP in 2016 continued to grow, as consumption comprised almost two thirds of the national economy. With the change of economic models, energy intensity per unit of GDP last year declined by 5 percent, a figure reflecting painstaking endeavors. The proportion of clean energy use increased and enterprises' efficiency levels have improved. Improvements in quality and efficiency are important parameters for economic transformation. To conclude, last year, the economy performed in an appropriate range with improved caliber and efficiency.
There have recently been many media reports about the economic data fraud scandal in Liaoning Province. What was the province's real situation between 2011 and 2014? Will its data be adjusted accordingly? Is data deception a common practice in other provinces? What measures will be taken to ensure we get the correct data?
The Liaoning Provincial Government has responded to the issue. You can contact the local statistics department for further information. The data involved in the scandal is mainly concerning financial revenue. On a national scale, the statistics remain reliable.
Fraud in some particular areas concerning some particular issues will be halted as soon as it is discovered. The National Bureau of Statistics has taken a series of measures to ensure the correctness of statistical data. It has also adopted legal approaches to prevent fraud. Part of its power involves the enforcement of the Statistics Law.
The growth of China's GDP was 6.7 percent overall last year, but 6.8 percent in the fourth quarter. And we also noticed that the loan increment hit a record high and that investments from State-owned agencies increased very fast, sparking concerns over China's rising debt ratio. What's your opinion on this issue? The National Bureau of Statistics has said it would include figures from online ride-hailing and the sharing economy into the GDP; can you give us an update on that?
As the Chinese economy grows, there has been a remarkable increase in loans granted, as well as aggregate financing. However, the growth of M2 money supply has slowed down compared to the previous two years, and currency liquidity is within a reasonable range.
The GDP growth figures we released reflect real growth after deducting price factors, while that of M2 is nominal growth. So, there seems to be a wide gap between the two figures. However, the nominal growth of GDP last year was 8 percent, not much lower than the M2 increase rate.
In terms of individual companies, the debt ratio of industrial enterprises with annual sales revenues of 20 million yuan ($2.9 million) or more is decreasing, albeit slowly. That's still a good trend—the debt ratio and leverage ratio are moving downward.
Credit loans and indirect financing are the mainstream financing methods in China and it's necessary to inject a certain amount of capital to boost the real economy. Therefore, there's no need to worry about the Chinese enterprise debt ratio. It's agreed internationally that China's government debt ratio is relatively low among major economies.
Figures from the sharing economy, online ride-hailing services and the once-popular vacation timeshare ownership have made statistics more difficult to calculate. We're still searching for an adequate calculation method, so they weren't included in last year's GDP. As for those factors with an internationally agreed calculation method, we have already included them into our GDP computation, such as including research and development into the GDP calculation. We'll continue to conduct research into the calculation of those factors you just mentioned.
What do you think will be Donald Trump's impact on the Chinese economy? How will he affect China's GDP in 2017?
I congratulate Mr. Trump on becoming the President of the United States. The United States is the largest economy in the world with a GDP of $18 trillion. China is the world's second largest economy with a GDP of $11 trillion. Meanwhile, the United States is the largest developed country, with its per-capita GDP reaching $50,000, and China is the largest developing country, with its per-capita GDP reaching $8,000. The average per-capita GDP is $11,000 worldwide. According to our statistics, the volume of Sino-U.S. bilateral trade was over $500 billion in 2016. The total amount of bilateral investment is over $100 billion. This is the largest investment figure in the world. People from both countries benefit a lot from the trade and investment, therefore, it is a mutually beneficial and win-win situation.
Personally, I believe and hope that Mr. Trump will consider the bilateral ties from the perspective of mutual benefit. As for the effect on China's GDP, I think the GDP of both countries will continue to grow as Mr. Trump also proposes to increase U.S. GDP. Furthermore, the Chinese economy will maintain a medium-high rate of growth.
The property market was hot last year. What is the real estate industry's contribution rate to economic growth? Will that rate be maintained in 2017?
With many contributing factors, property investment, the floor space of houses under construction, the floor space of buildings sold out, and the total sales volume of 2016 have all increased substantially compared to the previous year. From January to September, in first-tier cities and some second-tier cities, especially the key 15 cities, the property market grew faster and experienced a price hike.
In the past three months, however, the price hike has been controlled in these cities after the implementation of some restrictive policies.
While it's important to curb speculative activities in cities with surging housing prices, there is still excess supply in the real estate markets of third- and fourth-tier cities, as well as in some counties. In 2017, differentiated policies will be implemented in different cities based on local conditions.
In 2016, the value added of the property sector accounted for 6.5 percent of the national GDP. I think the real estate market will maintain healthy development in 2017 and I am very confident in that belief.
In past years, when the annual statistics were published, you would usually publish the Gini coefficient which reflects the national wealth gap. However, this time no such index has been published. Could you reveal that information to us? The income gap between urban and rural regions keeps on shrinking, so how about the Gini coefficient?
In recent years, China's Gini coefficient has in general been falling. As you can see, from 2012 to 2015, the Gini coefficient calculation for Chinese citizens' income was 0.474, 0.473, 0.469 and 0.462 respectively. The index for 2016 was 0.465, a slight rise of 0.003 from 2015.
However, it doesn't change the overall trend that the Gini coefficient is going down. Comparatively speaking, in the past year, China's urban and rural residents' income gap shrank. The per-capita income of urban households was 2.73 times that of rural households in 2015, while it dropped in 2016 to 2.72. Then why is the Gini index rising? According to our survey, it's mainly because the old-age pension growth rate for some low-income urban residents was slowing down, while in rural areas, some people made a living solely depending on grain production. Their income dropped in tandem with the falling grain price.
We have increased our efforts in poverty alleviation and relief, as well as speeding up urban and rural integration programs. It is anticipated that the residents' income gap will keep shrinking gradually.
Copyedited by Bryan Michael Galvan
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