Ningbo's Q1 Economic Performance: Interpretation of the 5.6% GDP Growth

City Landscape of Ningbo. (Photo by Tang Yan)

On April 22nd, the Ningbo Municipal Bureau of Statistics and the Ningbo Investigation Team of the National Bureau of Statistics released the economic performance of the city in the first quarter - the city achieved a regional gross domestic product (GDP) of 399.22 billion yuan, a year-on-year increase of 5.6%, respectively surpassing the same period last year and the full year by 1.1 and 0.1 percentage points. The economic operation continued to maintain a stable and positive momentum.

The first quarter serves as a barometer for the annual economy, crucial for setting a good start for the year, with data harboring signals and trends for both the first half and the full year.

What can we see through the first quarterly report? How is this "5.6%" data derived?

Industry remains the "dominant force"

What factors are supporting the economic rebound in the first quarter? The relevant person in charge of the municipal statistics bureau analyzed from three aspects: the production sector, demand sector, and physical quantity indicators.

"The role of industry as a 'cornerstone' is significant." In the view of the relevant person in charge of the municipal statistics bureau, due to the improvement in exports and a series of policy drives boosting demand, the added value of industrial production in the city grew by 7.1% in the first quarter, accelerating by 1.4 percentage points compared to the whole of last year, exceeding the GDP growth rate by 1.5 percentage points, contributing 52.1% to GDP growth, and propelling GDP growth by 2.9 percentage points.

Among them, the added value of large-scale industries increased by 7.4%, accelerating by 0.8 percentage points compared to the whole of last year.

This is most convincingly demonstrated by electricity consumption. In the first quarter, the total electricity consumption of society increased by 15.1%, with industrial electricity consumption up by 16.1%.

"Industry remains the 'absolute mainstay' driving Ningbo's GDP," said the relevant person in charge of the municipal statistics bureau.

In the first quarter, the added value of industries above designated size in Ningbo increased by 7.4% year-on-year, exceeding the national growth rate by 1.3 percentage points, with an average growth rate of 5.7% over the past two years, outpacing the national and provincial growth rates by 1.2 and 0.1 percentage points respectively.

In the current economic situation, the sustained "upward trend" in the added value of industries above designated size is backed by:

- Strong support from key industries.

In the first quarter, out of 36 major industry categories, the added value of 24 industries maintained positive growth, covering 66.7% of the growth spectrum.

The total added value of the top ten industries accounts for 79.1% of the added value of industries above designated size, with a year-on-year growth of 8.6%, contributing 94.3% to the added value growth of industries above designated size, and driving a 7.0 percentage point increase in the added value of industries above designated size.

Among them, the automotive manufacturing, chemical raw materials, metal products, and computer industries grew by 21.0%, 12.2%, 11.6%, and 10.8% respectively, all surpassing the growth rate of industries above designated size.

- Noticeable contribution from private enterprises.

In the first quarter, the added value of industrial enterprises owned by private entities accounted for 57.3% of the added value of industries above designated size, with a year-on-year growth of 7.8%, surpassing the added value of industries above designated size by 0.4 percentage points, contributing 60.4% to the added value growth of industries above designated size, and driving a 4.5 percentage point increase in the added value of industries above designated size.

- Leading development of "361" industrial clusters.

In the first quarter, the added value of "361" industrial clusters increased by 7.7% year-on-year, exceeding the growth rate of industries above designated size by 0.3 percentage points.

Among them, high-end equipment, smart home appliances, digital industries, and green petrochemicals grew by 10.3%, 9.6%, 9.3%, and 8.6% respectively, all surpassing the growth rate of industries above designated size.

- Improved business sentiment.

From the results of production and operation and business sentiment surveys, the capacity utilization rate of industrial enterprises above designated size in the city was 79.0% in the first quarter, up by 2.3 percentage points compared to the same period last year.

The business sentiment index of industrial enterprises above designated size in the city was 129.4 in the first quarter, an increase of 11.1 and 5.7 percentage points compared to the same period last year and the fourth quarter of last year respectively, the highest since 2022.

Among them, the business sentiment indexes of large, medium, small, and micro enterprises were 148.4, 142.0, and 128.0 respectively, achieving full coverage in the "relatively prosperous" range.

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Ningbo Jingzuan Technology Intelligent Production Workshop. (Photo by Tang Yan)

The service industry accounts for "half of the territory"

In addition to being the "absolute mainstay," the "Ningbo model" driven by dual engines has achieved a 5.6% growth on the new track of high-quality development, with the service industry also playing a significant role as a "booster."

In the first quarter, the value added by the service industry grew by 4.9%, contributing 47.9% to GDP growth and propelling GDP growth by 2.7 percentage points. Among them, transportation, warehousing, and postal services; information transmission, software, and information technology services; accommodation and catering; wholesale and retail trade grew by 13.6%, 11.3%, 9.5%, and 7.2% respectively, all surpassing the GDP growth rate and collectively driving GDP growth by 1.9 percentage points.

In line with this, a series of physical quantity indicators also reflect this trend. In the first quarter, Ningbo's freight volume increased by 14.4%, with road and waterway transportation turnover increasing by 17.8% and 14.3% respectively. The cargo throughput and container throughput of Ningbo Zhoushan Port increased by 6.8% and 11.6% respectively.

In terms of agriculture, the first quarter showed "overall stability." The value added of agriculture, forestry, animal husbandry, and fishery increased by 3.6%, contributing 0.1 percentage points to GDP growth.

"The efforts on the demand side should not be overlooked," said officials from the municipal statistics bureau.

Looking at the demand side, fixed asset investment maintained steady growth under the strong drive of infrastructure investment, increasing by 6.8% in the first quarter. Market consumption showed a significant recovery, driven by continuous efforts in consumer promotion policies and the extended Spring Festival holiday, with total retail sales of consumer goods increasing by 4.5%. As a major foreign trade city, Ningbo's import and export volume increased by 8.6%, influenced by the global economic recovery, expansion of external demand, and the low base effect, with exports increasing by 6.3%.

The contribution from the demand side is also evident from bank loan data. By the end of March this year, the local and foreign currency loans of financial institutions in Ningbo increased by 15.7%.

Consumer trends: ups and downs

Among the "three drivers" propelling the economy in the first quarter, the performance of the consumer sector is noteworthy.

"Ningbo's Consumer Price Index (CPI) remained flat compared to the same period last year, with a significant year-on-year decrease in March," according to officials from the municipal statistics bureau. In the first quarter, the year-on-year change in consumer prices in the urban area of Ningbo remained flat, consistent with the national trend.

Looking at the monthly situation, the year-on-year fluctuation is more pronounced. From January to March, the year-on-year changes were -1.2%, 1.1%, and 0.2% respectively, primarily due to the "misalignment of the Chinese New Year with the previous year."

Why did Ningbo's CPI remain unchanged compared to the same period last year? Officials from the municipal statistics bureau analyzed that in the first quarter, the year-on-year stability in consumer prices was due to the combined effects of falling commodity prices and rising service prices.

First, let's look at the "falling" aspect.

Prices of food, tobacco, and industrial consumer goods decreased year-on-year. The year-on-year increase in food, tobacco, and alcohol prices shifted from 0.9% last year to a decrease of 1.6% this year. Due to unusually warm temperatures in the surrounding areas during the winter and spring compared to the same period in previous years, suitable conditions for the growth of important agricultural products such as fresh vegetables and fruits led to increased supply, resulting in significant price decreases. Among them, vegetable prices decreased by 6.4%, and fruit prices decreased by 11.7%. Pork prices continued to decline due to oversupply of pork and adequate supply, decreasing by 11.3%. Additionally, other food prices also showed a downward trend, such as marine fish prices down by 6.5%, egg prices down by 6.5%, and beef prices down by 4.0%. Industrial consumer goods prices decreased by 0.7%, continuing the downward trend from last year. Influenced by factors such as significant price reductions in battery raw materials and intensified market competition, the prices of automobiles continued to decline, leading to a 5.1% year-on-year decrease in transportation equipment prices.

Now, let's consider the "rising" aspect.

Affected by changes in supply and demand, policy adjustments, and other factors, service prices increased by 1.7% year-on-year, expanding by 0.8 percentage points compared to the same period last year.

For example, in the tourism industry, as the economy of tourism travel improved, the demand for tourism services further expanded, driving up the prices of accommodation and tour guide services, leading to a 16.8% year-on-year increase in tourism prices and a 3.9% year-on-year increase in out-of-town accommodation prices. With the increase in ticket prices at scenic spots and the rise in prices for pet services and children's entertainment projects, the prices of cultural and entertainment services increased by 2.3% year-on-year.

At the same time, prices of public services also increased. Educational service prices increased by 2.6% year-on-year, with the demand for aesthetic education such as painting and musical instruments driving up training fees, leading to respective year-on-year increases of 3.7% and 3.1% in extracurricular education and early childhood education prices. Tuition fees were raised at the beginning of the 2023 fall semester, resulting in increases of 5.7%, 2.0%, and 1.9% in high school vocational education, primary and secondary education, and higher education prices, respectively. Due to adjustments in the prices of medical services at some public medical institutions, medical service prices increased by 1.9% year-on-year.

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Ningbo's enterprise booth at the Yangtze River Delta New Energy Expo. (Photo by Feng Xuan)

Surging momentum of new drivers

In the race for new productivity with "new" as the key word, Ningbo's performance is remarkable.

In the first quarter, Ningbo's new drivers accelerated their growth, significantly enhancing the driving force and resilience of the economy. New industries, new business, new investments, and new products are supporting the pillars of the city's high-quality development.

Firstly, new industries are showing good growth. In terms of industry, in the first quarter, the added value of artificial intelligence, strategic emerging industries, digital economy, and high-tech industries in the industrial sector grew by 13.2%, 8.9%, 8.9%, and 8.5% respectively, outpacing the overall industrial growth by 5.8, 1.5, 1.5, and 1.1 percentage points respectively.

In the service industry, in the first two months of this year, the revenue of high-tech services increased by 7.2%, with technology transfer services, research and design services, and information services increasing by 34.5%, 15.0%, and 9.7% respectively; scientific research and technical services increased by 6.7%, with research and experimental development, and technology promotion and application services increasing by 11.8% and 33.9% respectively.

Secondly, new business remains active. In the first quarter, online consumption demand was strong, with retail sales by trading units above a certain size through public networks increasing by 28.5%, a growth rate 23.9 percentage points higher than the total retail sales of consumer goods above the quota. Automobile consumption led the growth, with retail sales of automobiles above a certain quota increasing by 25.6%, among which new energy vehicles increased by 134.6%, maintaining a relatively high growth rate.

Thirdly, new investments are growing rapidly. In the first quarter, investment in high-tech industries increased by 8.0%, with investment in high-tech manufacturing increasing by 11.0%, both higher than the overall fixed asset investment growth rate by 1.2 and 4.2 percentage points respectively; in the "361" trillion-yuan industry clusters, investment in high-end equipment manufacturing and smart home appliances increased by 7.5% and 42.0% respectively.

Lastly, the cultivation of new products is accelerating. In the first quarter, the output value ratio of new products in large-scale industries reached 32%, an increase of 0.6 percentage points year-on-year; the output of new products such as new energy vehicles, integrated circuits, and industrial robots included in the national "three new" statistics increased by 97.8%, 41.3%, and 13.9% respectively.

Behind the 5.6% year-on-year GDP growth, we still need to recognize that Ningbo's industrial producer prices remain in a downward trend.

"This is due to the overall decline in the industry, but the narrowing decline in some industries and monthly declines continue, as well as the simultaneous decrease in prices of production materials and consumer goods," said officials from the municipal statistics bureau.

"Those who aim for the difficult achieve, those who do not avoid challenges advance." The "Ningbo model" on its new journey is navigating through waves with stability and perseverance.

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