added by the primary, the secondary and the 6.3 trillion yuan, up by 12.2 percent year on tertiary industries reached 5.70 trillion yuan, year, with the growth rate rising 6.9 percent- 24.97 trillion yuan and 26.22 trillion yuan age points against the previous year. Among respectively, up by 4.4 percent, 7.8 percent 41 industrial categories, 35 reported year-on- and 8.3 percent year on year, and represent- year profit increase and six witnessed profit ing growth of.5 percentage points, -0.1 decrease. The number of industries that over the growth rates in 2012. The value- compared to that in 201 creased by five percentage points and 0. 2 percentage points experienced higher profit increased by five added of each industry as a share of GDP were 10.0 percent, 43.9 percent and 46.1 China's economic growth was driven more by its domestic demand and less by percent respectively, up by -0 1 percentage external demand points,-1. 4 percentage points and 1.5 per- centage points year on year. The proportion Total fixed asset investment of the year of the tertiary industry overtook the second- amounted to 44.71 trill ary industry for the first time on-year increase of 19.3 percento year th of 18.9 Steady growth in industrial production inflation. Of the total fixed asset invest and continuous improvement in corporate ment, investment in real estate development profitability reached 8.60 trillion yuan, up by 19.8 per- Calculated by comparable prices, the cent year on year, the actual growth hit 19.4 value-added of statistically large enterprises percent after adjusting for inflation; total increased by 9.7 percent year on year, a retail sales of consumer goods amounted 0.3 percentage points lower than that in the to 23.78 trillion yuan, up by 13. 1 percent previous year. The month-by-month trend year on year, or 11.5 percent in real terms; showed that the growth of statistically large total goods imports and exports reached enterprises in the last few months of 2013 US$4.16 trillion, up by 7. 6 percent year- far outweighed that of the first few months. on-year, wherein the exports reached USS The average monthly growth rate in the first 2.21 trillion, up by 7.9 percent and imports half of the year reached 9 percent and in the reached US$1.95 trillion, up by 7.3 percent second half of the year around 10 percent. Total trade surplus reached US$259.75 bil Total major business incomes achieved lion, up by 12. 8 percent year on year. The by statistically large industrial enterprises final consumption, gross capital formation reached 102.9 trillion yuan, registering a and net export of goods and services made year-on-year growth of 11.2 percent, up by respective contributions of 50.0 percent, 0.2 percentage points against the previous 54. 4 percent and -4. 4 percent to the overall year. Total profit realized in the year was economic growth in 2013, and drove the
15 added by the primary, the secondary and the tertiary industries reached 5.70 trillion yuan, 24.97 trillion yuan and 26.22 trillion yuan respectively, up by 4.4 percent, 7.8 percent and 8.3 percent year on year, and representing growth of -0.5 percentage points, -0.1 percentage points and 0.2 percentage points over the growth rates in 2012. The valueadded of each industry as a share of GDP were 10.0 percent, 43.9 percent and 46.1 percent respectively, up by -0.1 percentage points, -1.4 percentage points and 1.5 percentage points year on year. The proportion of the tertiary industry overtook the secondary industry for the first time. Steady growth in industrial production and continuous improvement in corporate profitability Calculated by comparable prices, the value-added of statistically large enterprises increased by 9.7 percent year on year, a 0.3 percentage points lower than that in the previous year. The month-by-month trend showed that the growth of statistically large enterprises in the last few months of 2013 far outweighed that of the first few months. The average monthly growth rate in the first half of the year reached 9 percent and in the second half of the year around 10 percent. Total major business incomes achieved by statistically large industrial enterprises reached 102.9 trillion yuan, registering a year-on-year growth of 11.2 percent, up by 0.2 percentage points against the previous year. Total profit realized in the year was 6.3 trillion yuan, up by 12.2 percent year on year, with the growth rate rising 6.9 percentage points against the previous year. Among 41 industrial categories, 35 reported year-onyear profit increase and six witnessed profit decrease. The number of industries that experienced higher profit increased by five compared to that in 2012. China’s economic growth was driven more by its domestic demand and less by external demand Total fixed asset investment of the year amounted to 44.71 trillion yuan, a yearon-year increase of 19.3 percent, or a real growth of 18.9 percent after adjusting for inflation. Of the total fixed asset investment, investment in real estate development reached 8.60 trillion yuan, up by 19.8 percent year on year, the actual growth hit 19.4 percent after adjusting for inflation; total retail sales of consumer goods amounted to 23.78 trillion yuan, up by 13.1 percent year on year, or 11.5 percent in real terms; total goods imports and exports reached US$4.16 trillion, up by 7.6 percent yearon-year, wherein the exports reached US$ 2.21 trillion, up by 7.9 percent and imports reached US$1.95 trillion, up by 7.3 percent. Total trade surplus reached US$259.75 billion, up by 12.8 percent year on year. The final consumption, gross capital formation and net export of goods and services made respective contributions of 50.0 percent, 54.4 percent and -4.4 percent to the overall economic growth in 2013, and drove the
2013 ANNUAL REPORT economy forward by 3.85 percentage points, which registered respective increases of 13.7 4. 19 percentage points and -0.34 percentage percent, 13.3 percent, 14.6 percent, 21.9 per points. The driving force of gross capital cent, 14.2 percent and 13. 1 percent against formation outperformed that of final the levels in the previous year, all higher than sumption, whereas the net export of goods the overall expenditure growth of the nation and services continued to be a drag of the Employment basically kept stable and Chinese economy(Figure 2) household income grew slower Figure 2 The ECo of Three Total number of new jobs created in 2013 Fmal consumption Gross capital formation a Net export of goods reached 13.10 million. 440.000 more than the growth in 2012. The registered urban rimi unemployment rate as of end 2013 was 4.05 percent, slightly lower than the 4.09 percent registered at the end of 2012. Average per 。§喜点到目司 capita disposable income reached 18, 311 yuan, up by 10.9 percent in nominal terms Source State Statistics Bureau and by 8. 1 percent in real terms comparing to Slowed growth in fiscal revenues with the growth rates in 2012. Per capital dispos- able income for urban residents hit 26955 optimized expense structure yuan, up by 9.7 percent in nominal terms and Total fiscal revenue in 2013 reached 7.0 percent in real terms year on year with 12.91 trillion yuan, increased by 1. 19 tril- the actual growth rate dropping 2.6 percent lion by 10.1 percent, dropping 2. 7 age points against the previous year. Per percentage points against the previous year. capital net income of rural residents in 2013 The fiscal revenue in the second half of the reached 8, 896 yuan, up by 12.4 percent in year grew more quickly than the first half nominal terms and 9. 3 percent in real terms of the year. Total fiscal expenditure reached with the actual growth rate dropping 1. 4 per 13.97 trillion yuan, increased by 1.38 trillion centage points against the previous year yuan or 10.9 percent, dropping 4.2 percent- The overall price level remained stable age points against the previous year. In terms of expenditure structure, rapid expenditure In 2013, affected by the changing domes- growth mainly went to science and technol- tic-growth situation, the major price indices ogy, medical care and health, social security registered low readings before stabling in and employment, community affairs at rural the later months, indicating a general stable and urban areas, energy conservation and trend throughout the year( Figure 3).From environmental protection and transportation, the first quarter to the fourth quarter, the CPI
2013 ANNUAL REPORT 16 economy forward by 3.85 percentage points, 4.19 percentage points and -0.34 percentage points. The driving force of gross capital formation outperformed that of final consumption, whereas the net export of goods and services continued to be a drag of the Chinese economy (Figure 2). -4 -2 0 2 4 6 8 10 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % Source: State Statistics Bureau. Figure 2 The Economic Contribution of Three Major Forces Final consumption Gross capital formation Net export of goods and services Year Slowed growth in fiscal revenues with an optimized expense structure Total fiscal revenue in 2013 reached 12.91 trillion yuan, increased by 1.19 trillion yuan or up by 10.1 percent, dropping 2.7 percentage points against the previous year. The fiscal revenue in the second half of the year grew more quickly than the first half of the year. Total fiscal expenditure reached 13.97 trillion yuan, increased by 1.38 trillion yuan or 10.9 percent, dropping 4.2 percentage points against the previous year. In terms of expenditure structure, rapid expenditure growth mainly went to science and technology, medical care and health, social security and employment, community affairs at rural and urban areas, energy conservation and environmental protection and transportation, which registered respective increases of 13.7 percent, 13.3 percent, 14.6 percent, 21.9 percent, 14.2 percent and 13.1 percent against the levels in the previous year, all higher than the overall expenditure growth of the nation. Employment basically kept stable and household income grew slower Total number of new jobs created in 2013 reached 13.10 million, 440,000 more than the growth in 2012. The registered urban unemployment rate as of end 2013 was 4.05 percent, slightly lower than the 4.09 percent registered at the end of 2012. Average per capita disposable income reached 18,311 yuan, up by 10.9 percent in nominal terms and by 8.1 percent in real terms comparing to the growth rates in 2012. Per capital disposable income for urban residents hit 26,955 yuan, up by 9.7 percent in nominal terms and 7.0 percent in real terms year on year with the actual growth rate dropping 2.6 percentage points against the previous year. Per capital net income of rural residents in 2013 reached 8,896 yuan, up by 12.4 percent in nominal terms and 9.3 percent in real terms with the actual growth rate dropping 1.4 percentage points against the previous year. The overall price level remained stable In 2013, affected by the changing domestic-growth situation, the major price indices registered low readings before stabling in the later months, indicating a general stable trend throughout the year (Figure 3). From the first quarter to the fourth quarter, the CPI
Figure 3 CPI and PPl Year on Year Changes hensively deepen reforms in all aspects. The year 2014 is also a critical year for China to CPI (hs) the 12th Five-Year Plan. The fun damentals of the Chinese economy remain unchanged with untapped potential in indus- trialization. urbanization. informatization and regional development, the huge potential hndnndnddEnzdY,M in upgrading consumption structure, and the ource State Statistics Bureau strong growth momentum in modern service industry, hi-tech industry and some emerging by 2. 4 percent, 2.4 percent, 2.8 percent industries. The potential and spare room for and 2.9 percent year on year respectively economic development remains fairly large the average CPI increase of the year reg- The release of a series of reform policies istered at 2.6 percent, equaling that of the such as transforming the functions of the revious year. In terms of categories the government, streamlining administration and growth in food prices slightly dropped and delegating power, and structural tax reduc- registered an increase of 4.7 percent, drop- tion will help to unleash the decisive role of ping 0. 2 percentage points against that of the the market in resource allocation, boost the previous year. The prices of non-food goods market vitality and release the huge poten maintained basically stable with a yearly tial of economic development. However, in rise of 1. 6 percent. The Producer Price Index the mean time, the Chinese economy faces (PPI)fell by 1.9 percent year on year, and numerous risks and challenges. The founda- the Purchasing Price Index of Raw Material tion for stable economic growth is yet to be PPIRM) fell by 2.0 percent year on year solid: the intrinsic momentum of economi and both indexes further fell by 0.2 percent- growth needs to be further strengthened; the age points against the previous year potential risks in the financial sector cannot be ignored; the Chinese economy is increas- Economic outlook in 2014 ingly constrained by resources and environ- Chinas economy is expected to grow mental pressures; the problem of excessive steadily and progress toward a higher productivity in some industries remains se- quality growth rious; and, the problem of the employment structure is also an urgent one that is yet to The year 2014 is the first year for China be tackled. Moreover, uncertainties continue to comprehensively implement the decisions to exist in external demand and capital flow adopted at the Third Plenary Session of the Although confronted with many risks and 18 CPC Central Committee, and to compre- challenges, given Chinas huge development 17
17 hensively deepen reforms in all aspects. The year 2014 is also a critical year for China to complete the 12th Five-Year Plan. The fundamentals of the Chinese economy remain unchanged with untapped potential in industrialization, urbanization, informatization and regional development, the huge potential in upgrading consumption structure, and the strong growth momentum in modern service industry, hi-tech industry and some emerging industries. The potential and spare room for economic development remains fairly large. The release of a series of reform policies such as transforming the functions of the government, streamlining administration and delegating power, and structural tax reduction will help to unleash the decisive role of the market in resource allocation, boost the market vitality and release the huge potential of economic development. However, in the mean time, the Chinese economy faces numerous risks and challenges. The foundation for stable economic growth is yet to be solid; the intrinsic momentum of economic growth needs to be further strengthened; the potential risks in the financial sector cannot be ignored; the Chinese economy is increasingly constrained by resources and environmental pressures; the problem of excessive productivity in some industries remains serious; and, the problem of the employment structure is also an urgent one that is yet to be tackled. Moreover, uncertainties continue to exist in external demand and capital flows. Although confronted with many risks and challenges, given China’s huge development rose by 2.4 percent, 2.4 percent, 2.8 percent and 2.9 percent year on year respectively, the average CPI increase of the year registered at 2.6 percent, equaling that of the previous year. In terms of categories, the growth in food prices slightly dropped and registered an increase of 4.7 percent, dropping 0.2 percentage points against that of the previous year. The prices of non-food goods maintained basically stable with a yearly rise of 1.6 percent. The Producer Price Index (PPI) fell by 1.9 percent year on year, and the Purchasing Price Index of Raw Material (PPIRM) fell by 2.0 percent year on year, and both indexes further fell by 0.2 percentage points against the previous year. Economic Outlook in 2014 China’s economy is expected to grow steadily and progress toward a higher quality growth The year 2014 is the first year for China to comprehensively implement the decisions adopted at the Third Plenary Session of the 18th CPC Central Committee, and to compreFigure 3 CPI and PPI Year on Year Changes -4 -2 0 2 4 6 8 0 2 4 6 8 2010.12 2011.02 2011.04 2011.06 2011.08 2011.10 2011.12 2012.02 2012.04 2012.06 2012.08 2012.10 2012.12 2013.02 2013.04 2013.06 2013.08 2013.10 2013.12 % % Year, Month CPI (lhs) PPI (rhs) Source: State Statistics Bureau
2013 ANNUAL REPORT potential and other driving forces, and with tural adjustment, economic reform and the comprehensive implementation of vari- risk prevention ous reform measures, the Chinese economy is expected to maintain its stable and positive Confronted with the complex and chang- growth momentum in the future ing domestic and external environment, the macroeconomic management in 2014 will Overall price level will remain stable focus on maintaining stability while pursu There are numerous favorable conditions ing progress, pushing forward reform and that point to a basically stable overall price innovation, ensuring the continuity and sta- level in 2014. To be specific, the economy bility of economic policies and continuing is expected to grow stably the supply of to improve the macroeconomic management major industrial products remains sufficient: framework. China will continue to adopt a ood harvest has continued for several con- proactive fiscal policy and a prudent mon secutive years; the monetary environment etary policy, and continue to make its macro- stable; the commodity prices are expected to economic measures more forward-looking, be stable as the world economy is experi- targeted and coordinated In the meantime, encing mild recovering and the US Federal China will strike a balance among preserving Reserve is going to taper the" Quantitative stable economic growth, adjusting economic Easing"policy. On the other hand, the over- structural, promoting economic reform, and all price level also faces some uncertainties, preventing risks, and ensure that the econ- such as the increase in labor cost may bring omy perform within a proper range. China mounting upward pressure to the prices of will comprehensively deepen reforms, carry agricultural products and services, the higher out innovation-driven development, further housing prices may transmit to the rental boost the market vitality, release the eco- market and other areas; and, the price reform nomic development potential in the course in resource-related products may, to some of structural adiustment and economic trans- extent,form upward pressures on prices too. formation and upgrading, and constantly In addition, the problem of excessive pro- improve the quality and efficiency of the ductivity in some industries remains serious economy. Meanwhile, China will strengthen The Ppi continues to face mounting down- macro-prudential management, enhance risk ward pressure. Generally speaking, against monitoring and assessment. establish a crisis the background of stable economic growth management and risk disposal framework and improving economic structure, the price level is expected to remain relatively stable promote the establishment of the deposit in- surance system, effectively prevent systemic Macroeconomic management will strike financial risks and protect the stability of the a balance among economic growth, struc- whole financial system 18
2013 ANNUAL REPORT 18 potential and other driving forces, and with the comprehensive implementation of various reform measures, the Chinese economy is expected to maintain its stable and positive growth momentum in the future. Overall price level will remain stable There are numerous favorable conditions that point to a basically stable overall price level in 2014. To be specific, the economy is expected to grow stably; the supply of major industrial products remains sufficient; good harvest has continued for several consecutive years; the monetary environment is stable; the commodity prices are expected to be stable as the world economy is experiencing mild recovering and the US Federal Reserve is going to taper the “Quantitative Easing” policy. On the other hand, the overall price level also faces some uncertainties, such as the increase in labor cost may bring mounting upward pressure to the prices of agricultural products and services; the higher housing prices may transmit to the rental market and other areas; and, the price reform in resource-related products may, to some extent, form upward pressures on prices too. In addition, the problem of excessive productivity in some industries remains serious. The PPI continues to face mounting downward pressure. Generally speaking, against the background of stable economic growth and improving economic structure, the price level is expected to remain relatively stable. Macroeconomic management will strike a balance among economic growth, structural adjustment, economic reform and risk prevention Confronted with the complex and changing domestic and external environment, the macroeconomic management in 2014 will focus on maintaining stability while pursuing progress, pushing forward reform and innovation, ensuring the continuity and stability of economic policies and continuing to improve the macroeconomic management framework. China will continue to adopt a proactive fiscal policy and a prudent monetary policy, and continue to make its macroeconomic measures more forward-looking, targeted and coordinated. In the meantime, China will strike a balance among preserving stable economic growth, adjusting economic structural, promoting economic reform, and preventing risks, and ensure that the economy perform within a proper range. China will comprehensively deepen reforms, carry out innovation-driven development, further boost the market vitality, release the economic development potential in the course of structural adjustment and economic transformation and upgrading, and constantly improve the quality and efficiency of the economy. Meanwhile, China will strengthen macro-prudential management, enhance risk monitoring and assessment, establish a crisis management and risk disposal framework, promote the establishment of the deposit insurance system, effectively prevent systemic financial risks and protect the stability of the whole financial system
GLOBAL ECONOMIC AND FINANCIAL DEVELOPMENTS In 2013, the global economic recovery was still slow and bumpy. The momentum of U.S. economic growth strengthened, but not without policy risks. Euro Area economies stepped out of recession, but the recovery was still weak. Japanese economy rebounded strongly supported by policy stimulus. Some emerging market economies experienced slower growth and with turbulence in financial markets and rising risks. Major finan cial markets and commodities markets saw marked fluctuations during the year. The statistics released by the International Monetary Fund (IMf) showed that the global economy grew by 3.0 percent in 2013, while the growth rates for the U.S., Euro Area p pan and emerging market economies were 1.9 percent,-0.5 percent, 1.5 percent and .7 percent, respectively Economic Developments in the Major October 2008. Inflation in 2013 was low, Economies and CPi grew only by 1.5 percent year on The momentum of U.S. economic growth year in December. Except for May, the monthly PMi data released by Institute strengthened for Supply Management (ISM) was all The data released by U.S. Bureau of above 50, the level that separates expan Economic Analysis(BEA)showed that sion from a contraction. The trade deficit U.S. GDP grew by 1.9 percent in 2013, narrowed to US$471.5 billion in 2013, de- with quarterly growth rates(quarter-on- creasing 11. 8 percent year on year. Since quarter and annualized )at 1. 1 percent, the middle of October, fiscal risks of the 2.5 percent, 4.1 percent and 2.6 percent, U.S. were reduced to some extent. but respectively. The growth rate of the third there was no concrete progress on fiscal quarter was the highest recorded since the consolidation in the medium term. Mean first quarter of 2012. Unemployment rate while, great uncertainties remained with decreased from 7.9 percent in January to regard to the negative impact of tapering 6.7 percent in December, the lowest since quantitative easing
19 GLOBAL ECONOMIC AND FINANCIAL DEVELOPMENTS In 2013, the global economic recovery was still slow and bumpy. The momentum of U.S. economic growth strengthened, but not without policy risks. Euro Area economies stepped out of recession, but the recovery was still weak. Japanese economy rebounded strongly supported by policy stimulus. Some emerging market economies experienced slower growth and with turbulence in financial markets and rising risks. Major financial markets and commodities markets saw marked fluctuations during the year. The statistics released by the International Monetary Fund (IMF) showed that the global economy grew by 3.0 percent in 2013, while the growth rates for the U.S., Euro Area, Japan and emerging market economies were 1.9 percent, -0.5 percent, 1.5 percent and 4.7 percent, respectively. October 2008. Inflation in 2013 was low, and CPI grew only by 1.5 percent year on year in December. Except for May, the monthly PMI data released by Institute for Supply Management (ISM) was all above 50, the level that separates expansion from a contraction. The trade deficit narrowed to US$471.5 billion in 2013, decreasing 11.8 percent year on year. Since the middle of October, fiscal risks of the U.S. were reduced to some extent, but there was no concrete progress on fiscal consolidation in the medium term. Meanwhile, great uncertainties remained with regard to the negative impact of tapering quantitative easing. Economic Developments in the Major Economies The momentum of U.S. economic growth strengthened The data released by U.S. Bureau of Economic Analysis (BEA) showed that U.S. GDP grew by 1.9 percent in 2013, with quarterly growth rates (quarter-onquarter and annualized) at 1.1 percent, 2.5 percent, 4.1 percent and 2.6 percent, respectively. The growth rate of the third quarter was the highest recorded since the first quarter of 2012. Unemployment rate decreased from 7.9 percent in January to 6.7 percent in December, the lowest since