CCTV:

This year, the macro economy still faces the risks of inbound Covid-19 cases and uncertainties of the external economy. How do you view these issues? What kind of policies and reform measures will be taken to support the economic recovery and ensure the realization of economic and social development targets this year? Thanks. 

Ning Jizhe:

This is a good question. First of all, it should be noted that China's economic performance during the first two months of 2021 has continued the trend of steady recovery seen since the second quarter of last year. Production indicators show that, during the first two months of this year, overall electricity generation and rail freight volume increased by 24.2% and 16.5% respectively. Demand indicators show that the combined sales of retail and catering enterprises increased 28.7% year-on-year during this year's Spring Festival holiday, and 4.9% from the 2019 Spring Festival holiday, which was before the Covid-19 outbreak. A total of 12.265-billion-yuan cinema tickets were sold this February, setting a global single-market box office record for a single month. After the Spring Festival, the rate of investment projects starting and resuming and construction companies starting work were higher than in previous years. Import and export figures were released yesterday. Total renminbi-denominated imports and exports from January to February up 32.2% year-on-year, with exports up 50.1%. In terms of economic outlook indicators, the manufacturing purchasing managers' index (PMI) and the non-manufacturing business activity index stood at 50.6% and 51.4% respectively in February, marking the 12th consecutive month the indexes were above the 50-point mark indicating economic expansion. This shows that the economy has maintained its expansionary trend.

In the meanwhile, like you said, to ensure continuous and stable economic recovery, China still faces risks and challenges. The Covid-19 epidemic is still spreading around the globe. The world economic situation is severe and complex, and the number of unstable and uncertain factors has increased. Also the foundation for domestic economic recovery is not yet solid. Consumption is still constrained, the growth of investment is not sustainable, and micro, small and medium-sized enterprises and self-employed individuals still face many difficulties. But we should view many of these domestic economic problems as problems existing only during the recovery period and can be resolved through development. As for the inbound risks you mentioned, we need to respond to them in an active and proper manner. We will counteract the uncertainties of the complex external environment by increasing internal certainty through active efforts. 

We all see that the draft report on development plan has made clear the major targets of social and economic development for 2021, such as a GDP growth of over 6%, over 11 million new urban jobs, a surveyed urban unemployment rate of around 5.5% and a CPI increase of around 3%. These targets are based on consideration of economic recovery, impacts of Covid-19 on the economic trajectory, and the balance and connection between different years. They are in line with the principles of range-based regulation and a prudent approach to development. We have the confidence that with the support of macro policies and the joint efforts of market entities, we will achieve the social and economic development targets this year. I will highlight policies and measures in the following six aspects:

First, we will work to ensure that macro policies provide necessary support to the economy. To promote steady, healthy and sustainable economic development, we must ensure continuity, stability and sustainability of macro policies. We should avoid a sudden turn in policies and adjust and improve policies as situations change in a timely fashion. We will continue to pursue a proactive fiscal policy. In 2021, we will arrange more than 25 trillion yuan in expenditure in the general public budget, up by 1.8% over the previous year. We will raise the general transfer payments from central to local governments by 7.8%, and increase transfer payments for equalizing access to basic public services by over 10%. We will continue to pursue a prudent monetary policy and enable the increases in money supply and aggregate financing to be generally in step with the nominal GDP growth. This year, we may see a relatively higher nominal GDP growth, which requires us to maintain reasonable and ample liquidity. We will continue to implement the employment-first policy. This year, the target for new urban jobs is two million more than that of last year. For companies that do not cut jobs or only cut a small number of jobs, we will continue to provide adequate fiscal and financial policy support and lower premiums for unemployment insurance and work injury compensation insurance.  

Second, we will continue to implement preferential policies for enterprises to address their problems. Enterprises are the source of economic growth. Ensuring the stability of the 140 million market entities means that we can keep the fundamentals of the economy stable. Regarding tax-cuts, we will continue to implement systematic tax-cut policies, extend the duration of several temporary policies, and adopt new structural tax reduction measures. Regarding financial policies, we will continue the policy of allowing micro and small businesses to defer principal and interest repayments on inclusive loans and channel more bank funds to micro and small businesses and self-employed individuals. Inclusive loans to micro and small businesses by large commercial banks will increase by over 30%. We will provide targeted support to enterprises and industries enduring a protracted hit from Covid-19. We will continue to guide the financial sector to give more to the real economy. To reduce costs, electricity rates for general industrial and commercial businesses will be further reduced. Average rates for broadband and dedicated internet access services for small and medium-sized enterprises will be lowered by another 10%. The port development fee will be abolished. Airlines' contributions to the civil aviation development fund will be cut by 20%. Governments in localities that were hit hard by Covid-19 will be encouraged to lower or waive rentals on state-owned property for micro and small businesses and self-employed individuals in the service sector.

Third, we will make good use of reform policies. Reform is both a driving force and an integral part of the macro policy. Achieving steady growth must rely more on reform and innovation as the fundamental driving force. Reform policies should aim to energize market entities. We will uphold the "two no irresolutions" principle (no irresolution about consolidating and developing the public sector and no irresolution about encouraging, supporting, and guiding non-public sector development). We will implement the action plan for building a high-standard market system, and deepen reforms to streamline administration and delegate power, improve regulation, and upgrade services. We will also deepen the reforms of enterprises, fiscal, taxation, financial and price systems. Opening-up policies should be more supportive to keep the fundamentals of foreign trade and investment stable and ensure the stability of trade volume and market entities. We will stabilize the volume and improve the quality of imports and exports and maintain a basic equilibrium in the balance of payments. We will further the development of pilot free trade zones, the Hainan Free Trade Port and other highlands for opening up. We will leverage the massive domestic market to promote international cooperation and promote a positive interplay between the domestic circulation and international circulation. 

Fourth, we will make clear the directions for sci-tech development and industrial policies. Science and technology are the driving force of development, and industry is the vital foundation for development. We will strengthen scientific and technological self-reliance, vigorously enhance scientific and technological innovation capabilities, significantly increase spending in basic research, and effectively achieve breakthroughs in core technologies in key areas. Meanwhile, we will further strengthen international cooperation in the field of science and technology. We will advance the supply-side structural reform and make full efforts to revitalize and promote the real economy, upgrade the industrial foundation and modernize industrial chains. A major campaign to develop advanced manufacturing industry clusters will be launched. The proportion of R&D expenses covered by the additional tax reduction policy will be raised to 100 percent for manufacturing enterprises. We will make a full refund of incremental VAT credits to advanced manufacturing enterprises on a monthly basis, and raise the proportion of loans to the manufacturing sector. We will implement a series of policies to promote high-quality development of the integrated circuit industry and the software industry in the new era. Pilot projects that integrate the advanced manufacturing industry and the modern service industry will be carried forward. 

Fifth, we will focus on demand-side regulation. To foster a new development paradigm, we must firmly expand domestic demand as a strategic priority, accelerate the cultivation of a complete domestic demand system, promote the coordinated development of domestic and external demand, and give full play to the fundamental, critical and supportive role of consumption, investment and exports on economic growth. I'd like to talk a little bit more about consumption. To expand consumption, we must stabilize and create more jobs and ensure steady increases in people's income. In the meanwhile, we must notice that per capita consumer spending dropped by 4% last year, lower than the real growth rate of 2.1% of per capita disposable income of Chinese residents. This was mainly due to reduced contacts and gatherings because of the epidemic. Therefore, to further tap consumption potential, we must maintain epidemic prevention and control measures on a continuing basis and promote consumption at the same time. We also need to expand the consumption of goods, including commodity consumption, service consumption, health consumption, information consumption, online consumption and green consumption. To promote auto consumption, we will carry out policies to encourage auto consumption in rural areas and auto trade-ins. We will guide local governments to ease purchase restrictions for new-energy vehicles and issue more license plates. These measures will spur auto consumption and lead to healthy and orderly development of new-energy vehicles. In 2020, the output of new-energy vehicles hit 1.456 million, up by 17.3% over the previous year. In regards to housing, we will increase the supply of government-subsidized rental housing and shared ownership housing to address the housing difficulties of the people, especially new urban residents and young people.

Sixth, we will push forward green, low-carbon and circular development. Strengthening protection of the environment is favorable for fostering new areas of high-quality development. To achieve peak carbon emissions and carbon neutrality is an opportunity to step up the upgrading of industry and energy structures. In 2020, the installed power generating capacity of renewable energy stood at 934 million kw and we will further increase it. While increasing the capacity, we will also address the problem of idle capacity and improve storage capacity to achieve coordinated and orderly development. We will promote the cultivation of energy-saving and environmental protection industries worth of trillions of yuan. The green transformation of major industries and areas will be carried forward. Thus, we will realize the targets of a drop of around 3% in energy consumption per unit of GDP and a continued reduction in the discharge of major pollutants.