Continuously Optimizing Growth Momentum
The new drivers of economic growth are accelerating, and the quality of economic growth is steadily improving. The growth rate of broad infrastructure continues to rise, reflecting the continuous strengthening of central fiscal efforts.
In July, China's economic operation continued its overall stable and progressive development trend. Data released by the National Bureau of Statistics show that in July, the national industrial value added above the designated size grew by 5.1% year-on-year, with a slight decrease of 0.2 percentage points compared to June; excluding seasonal factors, the industrial value added above the designated size increased by 0.35% month-on-month. From January to July, the national fixed asset investment (excluding households) grew by 3.6% year-on-year, with a decrease of 0.3 percentage points compared to the first half of the year. In July, the total retail sales of consumer goods reached 3.7757 trillion yuan, with a year-on-year growth of 2.7%, and the growth rate accelerated by 0.7 percentage points compared to June. In July, the national resident consumer price index rose by 0.5% year-on-year, with a rebound of 0.3 percentage points compared to the previous month.
From the marginal perspective, the growth rates of industry and investment slightly declined, while the growth rate of consumption rebounded, and the price level rebounded moderately. More importantly, the new drivers of economic growth are accelerating, and the quality of economic growth is steadily improving. In addition, the growth rate of broad infrastructure continues to rise, reflecting the continuous strengthening of central fiscal efforts.
The growth rate of consumption rebounded slightly
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In July, the total retail sales of consumer goods reached 3.7757 trillion yuan, with a year-on-year growth of 2.7%, and the growth rate accelerated by 0.7 percentage points compared to June. The marginal growth rate of consumption rebounded slightly, but there is still differentiation within consumption.
The growth rate of retail sales of necessary consumer goods remained relatively high, with grain and oil, food, beverages, and Chinese and Western medicine categories growing by 9.9%, 6.1%, and 5.8% respectively. Among optional consumption, real estate chain consumption is still relatively weak, with retail sales of home appliances, decoration, and furniture growing by -2.4%, -2.1%, and -1.1% year-on-year, respectively.
In July, the sales growth of some upgraded goods was relatively fast, with retail sales of communication equipment and sports and entertainment goods in units above the designated amount growing by 12.7% and 10.7%, respectively. China Galaxy Securities believes that July is the peak season for summer tourism, with an increase in residents' travel and related sports activities, driving the growth of sales of sports and entertainment goods. According to data from the National Railway Group, since the start of the summer travel season, from July 1 to August 8, the national railway has sent a total of 540 million passengers, with a year-on-year growth of 5.1%, and an average daily passenger volume of 13.86 million, maintaining a high level of passenger flow.
Automobile consumption reflects the upgrading and replacement, and the sales of new energy vehicles continue to maintain high growth, with further improved penetration rate. The Passenger Car Association's data shows that in July, the retail sales of narrow passenger cars were 1.72 million (previous value 1.765 million), with a year-on-year decline of 2.8%. According to the statistics of the Automobile Circulation Association, in July, the retail volume of new energy vehicles was 878,000, with a growth of 36.9%, and the penetration rate exceeded 50% for the first time.
Manufacturing investment continues to be strong
With the continuous advancement of high-quality development, the pace of high-end, intelligent, and green manufacturing is accelerating, and manufacturing investment continues to maintain rapid growth. From January to July, manufacturing investment grew by 9.3% year-on-year, with a growth rate 5.7 percentage points higher than the total investment; the contribution rate to the total investment growth was 62.2%, an increase of 4.7 percentage points compared to the first half of the year. Among them, investment in consumer goods manufacturing grew by 15.8%, investment in equipment manufacturing grew by 10.7%, and investment in raw material manufacturing grew by 9.3%.Additionally, investment in high-tech industries continues to maintain rapid growth, with the quality of investment continuously improving. From January to July, high-tech industry investment increased by 10.4% year-on-year, 6.8 percentage points higher than the total investment. Among them, investment in high-tech manufacturing and high-tech services increased by 9.7% and 11.9% respectively.
China Galaxy Securities believes that looking ahead, new qualitative productive forces will continue to drive investment in manufacturing. Large-scale equipment upgrades and consumer goods replacement policies will continue to drive general-purpose and specialized equipment, and at the same time, with the support of policies to stimulate domestic demand, investment in consumer goods manufacturing will also show marginal recovery.
In terms of infrastructure investment, from January to July, infrastructure investment (excluding electricity) increased by 4.9% year-on-year, with the growth rate continuously declining after the first quarter. However, the cumulative year-on-year growth rate of broad infrastructure investment including electricity has been rising for two consecutive months, showing a certain divergence from narrow infrastructure. Looking at the structure of infrastructure growth, from January to July, investment in water conservancy management increased by 28.9%, investment in air transport increased by 25.5%, and investment in railway transport increased by 17.2%. Generally, electricity, water conservancy, and railways are investment projects led by the central government.
Minsheng Securities believes that the recent divergence in the growth rates of broad and narrow infrastructure investment reflects the central government's investment in public utility fields, while local governments lack investment willingness.
On the one hand, under the background of local debt reduction, there are fewer local infrastructure projects that meet the project return rate, and some new special bond quotas need to be used for the replacement of existing debt; on the other hand, the flood situation may have had a certain negative impact on the start of local projects.
Industrial steady growth
In July, the overall industrial production above the designated size in the country remained stable, with equipment manufacturing and high-tech manufacturing providing significant support, the industrial structure continued to optimize, new momentum continued to grow, the export growth rate of industrial products accelerated, and the high-quality development of the industrial economy continued to advance steadily.
On the one hand, the cultivation and growth of new momentum in manufacturing have accelerated. From the industry perspective, the added value of high-end equipment industries such as aerospace and equipment manufacturing, electronics and communication equipment manufacturing, and computers and office equipment manufacturing all achieved double-digit growth year-on-year, with growth rates of 18.1%, 13.1%, and 11.0% respectively, accelerating by 8.8, 2.1, and 6.8 percentage points respectively compared to June. From the product perspective, the output of civilian drone products increased by 84.7% year-on-year, service robots increased by 41.6%, integrated circuits increased by 26.9%, and industrial robots increased by 19.7%, all achieving relatively fast double-digit growth. Green products grew rapidly, with the output of new energy vehicles increasing by 27.8% year-on-year, polycrystalline silicon output increased by 27.3%, solar industrial ultra-white glass output increased by 23.1%, and wind turbine output increased by 39.6%.
On the other hand, the driving effect of industrial product exports continued to be evident. Although the international economic and trade environment is complex, China's foreign trade enterprises have fully utilized the advantages of the industrial chain, and the growth of industrial product exports has accelerated. In July, the export delivery value of industrial enterprises above the designated size increased by 6.4% year-on-year, accelerating by 2.6 percentage points compared to the previous month. Among the 39 major industries with exports, 33 industries achieved export growth, with a growth rate of 84.6%. Among the main export industries, the export delivery value of the electronics industry turned from a decline to an increase year-on-year, which is the main support for the acceleration of the export delivery value growth rate in the current month; the export delivery value of the automotive industry has maintained double-digit growth for 8 consecutive months since December 2023; general-purpose equipment, specialized equipment, and the chemical industry have also achieved double-digit growth.
Moderate price level reboundThe persistently low price level has been a major contradiction in this round of economic recovery. However, recently, due to the continuous recovery of consumer demand, coupled with the impact of high temperatures and rainfall in some regions, the price level has moderately rebounded. The national CPI turned from a decline to an increase on a month-on-month basis, and the year-on-year increase has expanded.
From a month-on-month perspective, the CPI in July increased by 0.5%, reversing the 0.2% decrease from the previous month, with the increase at a relatively high level in recent years for the same period. Looking at the year-on-year comparison, the CPI in July rose by 0.5%, with the increase expanding by 0.3 percentage points compared to the previous month.
The effect of the reduction in pig production capacity is gradually becoming apparent, driving up the price of pork. In July, the price of pork increased by 20.4% year-on-year, affecting the CPI increase by about 0.24 percentage points. Additionally, on a month-on-month basis, affected by high temperatures and rainfall in some regions, the prices of fresh vegetables and eggs in July rose by 9.3% and 4.4% respectively, collectively affecting the month-on-month increase in the CPI by about 0.20 percentage points, accounting for 40% of the total CPI increase.
CITIC Securities analysis points out that the reason for the unexpected increase in pork prices in the past two months is not due to improved demand, but rather due to a strong sentiment of holding back sales on the supply side. There is still momentum to support the continuous upward movement of pig prices. On the other hand, considering that the growth rate of current per capita wage income and property income is still in a downward trend, the actual consumption capacity of residents is to some extent limited, and the core CPI is likely to continue to operate at a relatively low level within the year. Considering both factors, it is expected that the year-on-year growth rate of the CPI will fluctuate around 0.5% in the third quarter, and is expected to rise to above 1.0% in the fourth quarter.
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