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Article by Ambassador of China to Iceland Zhang Weidong on China's Economy Published on Icelandic Newspaper

On 20 July 2016, Fréttablaðið, the biggest newspaper in Iceland, published Ambassador Zhang Weidong's bylined article entitled The Giant Ship of the Chinese Economy Sails Safe and Sound. The full text is as follows:

The Giant Ship of the Chinese Economy Sails Safe and Sound

-----Zhang Weidong, Ambassdor of China

Recently, I've come across some questions on the Chinese economy. How to judge the actual state of the Chinese economy? Will it collapse into doom and gloom? What role does it play in the world economy?

First of all, let's share some facts and figures of this year. China's GDP expanded by 6.7% in the first quarter of the year, and registered steady growth in the second quarter. Summer grain production is expected to be another bumper harvest. Corporate profits in the industrial sector are steadily rising. The service industry is growing rapidly, and market sales are steadily expanding. CPI is basically stable, the drop in PPI has narrowed, and energy intensity and emissions of major pollutants have continued to fall. In particular, the employment situation is stable. In the first five months of this year, 5.77 million new urban jobs were created, completing 58% of the annual employment target. The surveyed unemployment rate of 31 major cities in May was 5.02%.

All the indicators covering production, demands, prices, physical quantities and expectation indexes are rebounding. This is a solid basis for concluding that despite continued slowdown in global growth, the Chinese economy has on the whole maintained stability while making steady progress, and has performed within the appropriate range.

An important reason the Chinese economy has maintained steady growth in the first half of the year is that reform, innovation, adjustment and transformation have all played an important role. Reform efforts to streamline administration, delegate power and improve government services have given a strong boost to mass entrepreneurship and innovation, and further unleashed development potential. Now every day in China, some 40,000 new market entities are being created, including over 13,000 new enterprises, having given a strong boost to job creation. The leading role of consumption and services is becoming more visible. New areas of consumption such as information and communication, smart phones and new energy vehicles are rapidly expanding. The five "happiness industries" of tourism, culture, sports, health and old-age care are rapidly growing. The service sector has grown into the biggest industry in the national economy, both in terms of its output and the number of jobs it created. An innovation-driven economy is brimming with vitality. High-tech industries, high-end manufacturing, e-commerce and other new business forms are booming. Enterprises, sectors and regions that have made an early start in economic transformation and upgrading and that embrace faster growth of new industries have all taken on a sound momentum of growth. On the whole, the Chinese economy is better structured; its quality is improving and a stronger momentum is being gathered. In the stage of transition, short-term fluctuations of economic growth are hardly avoidable, but the Chinese economy will not head for a "hard landing". The giant ship sails safe and sound.

In the meantime, we are aware that given the complex and challenging international environment and the deep-seated domestic problems accumulated over the years, the foundation underpinning stable performance of the Chinese economy is yet to be strengthened. The driving effect of external demand on growth is waning. Private and manufacturing investments are sluggish. Latent risks still exist in the financial and other sectors. In some industries with serious overcapacity and regions with monotonous economic structure, there have been relatively more problems. Downward economic pressure remains and the difficulties are not to be underestimated. However, the fact that we have recognized and stood up to challenges shows that we have the determination and ability to overcome difficulties. For the Chinese economy, there is always more hope than difficulties.

The Chinese economy has huge potential, strong advantage, broad space and bright prospect. China has a 900 million strong workforce, among whom 170 million have received higher education or training in professional skills. Every year we produce over seven million college graduates and over five million graduates from secondary vocational schools. We are No.1 in the world in terms of the number of science professionals and No.2 in R&D input, with an input of over RMB 1 trillion made last year. China is the second biggest economy, the largest manufacturing country, a major trading nation in goods and services, and a major destination and source of foreign investment. It is also the world's second largest consumer market. Its middle-income population is in the hundreds of millions and is still expanding. The number of the rural poor is falling year by year, while that of permanent urban residents is growing by over 10 million each year. All these make China a major emerging market with the biggest growth potential. It makes China a big stage where people from every corner could tap into their intellectual potential and start their business. We are optimistic about the current state and future prospect of the Chinese economy. The giant ship of the Chinese economy will sail far and safe and sound.

China will work with other countries to seize the opportunities brought by the new round of technological and industrial revolution to build new engines of economic growth, promote steady recovery of the world economy through transformation and upgrading, and jointly usher in a better future for the development of mankind.

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