GDP grew 3.2% in the second quarter from a year earlier, much faster than many experts at home and abroad had expected. This is not only the result of the central and local governments' consistent efforts to coordinate epidemic prevention and control and economic and social development, and the resumption of work and production at every opportunity, but also the result of the firm implementation of the strategy of expanding domestic demand. It is also closely related to the growing new drivers of China's economic development.

Since the beginning of this year, the COVID-19 epidemic has taken a huge toll on the Chinese economy and plunged the global economy into a deep recession. China's economic growth fell 6.8 per cent in the first quarter from a year earlier, the lowest since quarterly GDP calculations began. However, China's economy rebounded quickly, growing by 3.2 per cent in the second quarter from a year earlier, much more than many experts at home and abroad had expected.

In the face of the severe test brought by the COVID-19 epidemic and the complex and volatile environment at home and abroad, how did the 3.2 percent growth rate be achieved?

We will help all industries speed up the resumption of work and production

In the face of the epidemic, China has taken strong measures to control the spread of the epidemic in a relatively short period of time, but it has also paid some temporary economic costs. In particular, a large number of economic activities have pressed the "pause" button due to epidemic prevention.

Economic society is a dynamic circulatory system, cannot shut down for a long time. As the epidemic prevention and control situation gradually improved, the central government made it clear in late February that, on the premise of ensuring the epidemic prevention and control is in place, enterprises and public institutions in non-key areas of epidemic prevention and control should resume work and production, so as to restore the order of production and life.

Coordinating epidemic prevention and control with economic and social development has become an important principle in this year's work. From the central government to local governments, we have been making coordinated efforts to advance epidemic prevention and control and economic and social development. We have lost no time in resuming work and production. We have introduced a series of policies and measures to help enterprises solve difficulties and resume work and production in an orderly manner.

For example, we will increase the deficit by 1 trillion yuan and issue 1 trillion yuan of special government bonds to fight the epidemic, which will be transferred to local governments. We intensified efforts to cut taxes and fees, which now exceed 1 trillion yuan. We will innovate monetary policy tools that reach directly into the real economy, and encourage the financial system to deliver an appropriate 1.5 trillion yuan in interest to businesses.

"These fiscal and monetary policies go directly to local communities, benefit enterprises and benefit the people. They can be described as' precise drip irrigation '." Yan Pengcheng, director of the National Development and Reform Commission, said.

Thanks to a series of policies and measures, the resumption of work and production has been deepened. A survey of industrial enterprises above designated size by the National Bureau of Statistics shows that the start of production of industrial enterprises has gradually recovered from the serious shortage at the beginning of the year, and the start and resumption of production improved significantly in the second quarter. By the middle of June, industrial enterprises above designated size had basically started operations, and 68.4% of them had reached 80% or above the normal production level, up 17.2 percentage points from early April.

"In the second quarter, value-added growth was positive in all sectors except accommodation and catering, rental and business services and other services, which are still recovering from the severe impact of the epidemic." Zhao Tonglu, director of the National Economic Accounting Department of the National Bureau of Statistics, said.

The orderly resumption of work and production in all walks of life provides the most solid foundation for China's economic operation to decline first and then rise and steadily recover.

We will resolutely implement the strategy of expanding domestic demand

Domestic demand, including both consumption and investment, is the basic driving force for China's economic development. The Central government has always adhered to the strategy of expanding domestic demand. Especially since this year, China's economic development has been faced with unprecedented challenges, and the Central government has repeatedly reiterated the deployment of actively expanding domestic demand.

In accordance with the decisions and arrangements made by the central government, various regions and departments have introduced many policies and measures to boost domestic demand. On stabilizing investment, all regions and departments accelerated the construction of major projects, continued to strengthen areas of weakness, and implemented all investment policies to stabilize investment.

For example, the National Development and Reform Commission, when allocating investment from the central budget, earnestly implements the key construction tasks set by the CPC Central Committee and the State Council, and concentrates its efforts to accomplish big things, difficult things and urgent things. So far, over 90% of investment from the central government budget has been allocated, which has played a positive role in guiding and driving investment to strengthen weak links and stabilize investment.

As the policy of stabilizing investment continued to gain momentum, the decline in infrastructure investment, manufacturing investment and private investment continued to narrow. Investment in areas such as ensuring people's wellbeing and high technology grew at a faster pace. The planned total investment in new projects and the funds invested in place picked up fairly quickly, and investment played a much stronger role in driving economic growth. In the first half of the year, gross capital formation contributed 1.5 percentage points to GDP growth.

"In the second quarter, GROSS capital formation boosted GDP growth by 5 percentage points, reversing the downward trend in the first quarter. Capital formation was the main driver of growth because of the contraction in investment and the growth in industrial inventories. Zhao tonglu said.

In terms of consumption, in the first quarter, affected by the epidemic prevention and control, residents took the initiative to reduce shopping and cancel dinner parties, and the sales of non-essential commodities and the catering industry were significantly affected. With the positive momentum of epidemic prevention and control, emergency response levels have been lowered in many places, and work and life have been restored in an orderly manner. At the same time, the central and local governments have introduced a number of policies and measures, including tax and fee reductions, rent reductions, job stabilization subsidies and financial support, to help enterprises resume work and production in an orderly manner while preventing and controlling the epidemic.

After entering March, residents go out increasingly active, market sentiment gradually recovered, the market sales growth. From satellite images, the night lights in Shenzhen and Zhuhai on both sides of the Pearl River Estuary were significantly brighter in March than in mid-February. The number of trans-provincial freight lines has increased significantly, the long span lines have increased significantly, and the superposition effect makes the whole freight line network more dense.

Many cities have also given out "red envelopes" on a very large scale to boost consumer demand. Catering, transportation, clothing and beauty, leisure and entertainment, retail and other industries have seen significant growth, and the consumer market has steadily picked up.

Final consumer spending pulled down 2.9 percentage points of GDP in the first half. In the second quarter, final consumer spending pulled down 2.3 percentage points of GDP, down 2.1 percentage points from the first quarter.

While resolutely implementing the strategy of expanding domestic demand, with the accelerated implementation of the policy of stabilizing foreign trade, the effect of the measures is gradually showing. In the second quarter, net exports of goods and services contributed 0.5 percentage points to GDP growth, reversing the downward trend in the first quarter. According to customs statistics, since April, exports have maintained a year-on-year positive growth for three consecutive months, while imports turned negative and positive in June after a double-digit decline in April and May, with imports and exports gradually stabilizing.

New drivers of growth are emerging

In the first quarter, many industries were forced to close because of the outbreak. However, the impact of the epidemic has also accelerated the development of digital economy, intelligent manufacturing, life and health, and fostered many new industries and forms of business and a number of new enterprises.

Some retail and catering enterprises are actively developing online businesses and accelerating the development of contactless services such as Internet sales and take-out food delivery, which has driven online consumption to maintain a strong momentum of development and become a bright spot in economic operation.

As a matter of fact, at the beginning of this year, many shops and factories that could not normally operate had turned to the Internet one after another to display and sell their products through the tuyere of live-broadcasting. Many large enterprises and famous entrepreneurs also went to live broadcasting. Major e-commerce platforms have also offered subsidies and developed new marketing models to promote in-depth integration of online and offline activities.

Governments in many places have also cooperated with e-commerce platforms to carry out a series of activities such as "live-streaming with goods" and online exhibitions and sales. Many local government leaders have taken on the role of "peddlers", working with "Taobao" anchors to promote local specialties. Consumers are also shifting some of their spending from brick-and-mortar stores to "cloud consumption."

Liu Yuanchun, vice President of Renmin University of China, said that due to the impact of the epidemic prevention and control, market supply and consumption have dropped significantly. However, the way residents pay and shop is changing, with some elderly people learning to shop online, for example. The changes in consumption patterns caused by the epidemic will affect the future consumer market.

In addition, online education, online office, remote consultation and other industries have also achieved rapid expansion. China's macroeconomic research institute institute of industry economic and technical and economic services HongQun told reporters, deputy director of the research in recent years our country new forms, new model of service continuously emerging, digital economy, platform, e-commerce and other new momentum to speed up the economic growth, "online alternative offline" appeared "modern change traditional" characteristics, at the same time, online and offline demand to offset some of the outbreak, service consumption growing contribution to economic growth.

This trend has also forced many enterprises to take the initiative in adapting themselves to changes, promoting transformation and upgrading, and speeding up efforts to address weak areas in some industries. In the first half of this year, investment in high-tech industries increased by 6.3 percent and that in the pharmaceutical manufacturing industry by 13.6 percent. Investment in e-commerce services and services for transforming scientific and technological achievements rose by 32% and 21.8%, respectively.

Liu Aihua, spokesman for the National Bureau of Statistics, pointed out that new models such as telecommuting, online education and unmanned delivery in the first half of the year have effectively solved some difficulties in real life. New technologies such as cloud computing, big data and artificial intelligence are developing rapidly, and new industries such as digital economy, intelligent manufacturing and life and health have formed more growth poles, which will provide more support for economic growth in the next stage.