Economic Daily:

A continuous fall in the PPI shows although enterprises have now resumed work and production, there are still difficulties in restoring full capacity. Some have reported decreases in orders. Does this mean that China's industrial chains have not yet fully recovered from the impact of COVID-19? Also, how can our advantages in industrial chains be strengthened? Thank you.

Liu Aihua:

Thank you for your questions. In April, the PPI dropped 3.1% year on year, a larger decline than that in March. Structurally speaking, this decrease can largely be attributed to outside factors. Internationally, global crude oil prices fell sharply in April. The price of OPEC basket crude oil declined more than 70% in April compared to the high at the beginning of the year. As for other indicators, West Texas Intermediate crude oil futures dropped more than 40% in April compared with the previous month. The slump in the price of international crude oil has impacted prices in oil-related industries, thereby causing a drop in the PPI. At the same time, we should be aware of the decline in the demand in industrial markets. As I mentioned regarding restoring production capacity, nearly 85% of enterprises above designated size achieved 50% of their previous levels, which does indeed represent a certain gap from normal times. The construction and service sectors have shown similar features reaching even lower levels of production capacity. Changes in demand have influenced production to a certain extent. From the changing tendency of the PPI, on the one hand, we need to solidly promote the resumption of work, production and the markets, and release the huge potential in domestic demand. On the other hand, we must pay close attention to changes in the prices of major international commodities as well as the country's PPI. Generally, there is upward support for the PPI as order gradually returns to people's lives and production. 

Reuters:

Judging from the current trends, during which quarter do you expect the economy to come out of negative growth? Where should efforts be directed in expanding domestic demand? Investment or consumption? Thank you.

Liu Aihua:

Thank you for your questions. Your questions are focused on future trends. At present, on a monthly basis, industrial production achieved positive growth of 3.9% in April despite the gap from normal levels in former years and long-term trends. Other indicators such as investment, retail, exports and the service sector were all in a state of decline. In spite of the narrowed declines and positive growth in some indicators compared with the previous month, it is still a challenge to eliminate all the negative effects brought about by the epidemic during the early stages. It not only depends on the progress in domestic work resumption, but also the impact brought about by the international pandemic situation and external economic changes. Given the current situation, it remains to be seen how the economy will progress. However, as I said earlier, we have confidence, capacity and a solid base to maintain the momentum of restoration and improvement. 

Additionally, we will adhere to the strategy of expanding domestic demand amid the huge uncertainty of overseas demand. On one hand, we need to consolidate the basic function of consumption. On the other, we must strengthen the key role of investment. With regards to consumption, it is important to maintain growth in online consumption, whilst also recovering offline consumption. Key investment indicators have shown signs of recovery with many investment activities improving. Next, we will focus on strengthening public health governance capacity, upgrading industrial chains, consolidating the industrial development base, and fully allowing investment to play a key role. Thank you.