China’s GDP reached 45,661.4 billion yuan in the first half of 2020, a year-on-year decline of 1.6% at comparable prices.

The value-added of the primary industry was 2,605.3 billion yuan, a year-on-year growth of 0.9 percent; that of the secondary industry was 17,275.9 billion yuan, down by 1.9 percent; and that of the tertiary industry was 25,780.2 billion yuan, down by 1.6 percent.

Agricultural Production

In H1 of 2020, the value-added of agriculture (crop farming) grew by 3.8% year on year, 0.3 percentage point higher than that in the first quarter; specifically, the figure grew by 3.9% in the second quarter, 0.4 percentage point higher than the growth in the first quarter.

The overall output of summer grain was 142.81 million tons, an increase of 1.21 million tons over that of the previous year, up by 0.9%. The structure of crop farming was further optimized, as the sown area for cash crops such as rapeseed increased.

In H1, the output of milk grew by 7.9% year on year and that of eggs grew by 7.1%. The output of pork, beef, mutton, and poultry fell by 10.8%, the decrease of which narrowed by 8.7 percentage points compared with that of the first quarter.

Specifically, the output of poultry increased by 6.8%, up by 5.7 percentage points; that of mutton, beef and pork dropped by 2.5%, 3.4%, and 19.1% respectively, the decrease of which narrowed by 5.2 percentage points, 3.0 percentage points, and 10.0 percentage points respectively.

The pig production capacity continued to recover. By the end of the second quarter, 339.96 million pigs were registered in stock, an increase of 5.8% over that by the end of the first quarter, among which 36.29 million were breeding sows, up by 5.4% year on year, an increase of 7.3% over that by the end of the first quarter.

Industrial Production and High-tech Manufacturing

In H1, the total value added of the industrial enterprises above the designated size declined by 1.3% year on year, 7.1 percentage points slower than the decline of the first quarter; specifically, the figure grew by 4.4% in the second quarter and declined by 8.4% in the first quarter.

In June, the total value added of the industrial enterprises above the designated size grew by 4.8% year on year, 0.4 percentage point faster than that of May, growing for the third month in a row, or up by 1.3 percent month on month.

An analysis by types of ownership showed that the value-added of the state holding enterprises went down by 1.5% year on year; that of share-holding enterprises down by 0.8 percent; enterprises funded by foreign investors or investors from Hong Kong, Macao, and Taiwan down by 3.4 percent; and private enterprises down by 0.1%.

In terms of sectors, the value-added of the mining went down by 1.1%, the manufacturing down by 1.4% and the production and supply of electricity, thermal power, gas and water declined by 0.9%, 0.6 percentage point, 8.8 percentage points, and 4.3 percentage points slower than the decline of the first quarter respectively.

The value-added of high-tech manufacturing and equipment manufacturing grew by 4.5% and 0.4% respectively In H1; specifically, the figures went up by 10.0% and 9.7% respectively in June.

The output of some engineering machinery and new products witnessed fast growth. In H1, the production of excavators and shoveling machinery, integrated circuits, industrial robots, and trucks grew by 16.7%, 16.4%, 10.3%, and 8.4% year on year respectively.

In the first five months of 2020, the total profits made by industrial enterprises above the designated size totaled 1,843.5 billion yuan, down by 19.3% year on year, the decline of which continued to narrow.

Specifically, the figure went up by 6.0% year on year in May, while that in April went down by 4.3%. The Manufacturing Purchasing Managers’ Index stood at 50.9% in June, 0.3 percentage point higher than that of the previous month, staying above the threshold for the fourth consecutive month.

Service Sector

In H1, the total value added of the tertiary industry dropped year on year, 3.6 percentage points less than the decline of the first quarter; specifically, the figure grew by 1.9% in the second quarter and dropped by 5.2% in the first quarter.

By sectors, the value-added of information transmission, software and information technology and that of financial services grew by 14.5% and 6.6% respectively; wholesale and retail trades, accommodation and catering declined by 8.1% and 26.8% respectively, 9.7 percentage points and 8.5 percentage points slower than the decline in the first quarter.

In H1 of 2020, the Index of Services Production decreased by 6.1% year on year, 5.6 percentage points slower than the decline of the first quarter; specifically, the figure in June grew by 2.3%, 1.3 percentage points higher than that in May.

In the first five months, business revenue of service enterprises above the designated size dropped by 6.4%, the decline of which narrowed by 2.2 percentage points compared with that in the first four months; specifically, that of information transmission, software, and information technology services grew by 8.4%.

In June, the Business Activity Index for services was 53.4%, 1.1 percentage points higher than that in May.

Specifically, the Business Activity Index for railway transportation, road transportation, air transportation, postal services, telecommunication, broadcast, television satellite transmission services, internet, software and information services, monetary and financial services, capital market services, and insurance stood at 55.0% and above.

In terms of market expectations, the Business Activity Expectation Index for services was 59.0%.

Investment

In H1, the investment in fixed assets (excluding rural households) reached 28,160.3 billion yuan, down by 3.1% year on year, the decline of which narrowed by 3.2 percentage points compared with that in the first five months, or 13.0 percentage points compared with that in the first quarter.

Specifically, the investment in infrastructure was down by 2.7% and that in manufacturing down by 11.7%, the decline of which narrowed by 17.0 percentage points and 13.5 percentage points respectively compared with that in the first quarter; real estate development went up by 1.9% and down by 7.7% in the first quarter.

The floor space of commercial buildings sold reached 694.04 million square meters, down by 8.4%, and the total sales of commercial buildings were 6,689.5 billion yuan, down by 5.4%, 17.9 percentage points, and 19.3 percentage points slower than the decline in the first quarter respectively.

By industries, the investment in the primary industry grew by 3.8% despite a decline of 13.8% in the first quarter; that in the secondary industry went down by 8.3% and that in the tertiary industry down by 1.0%, 13.6 percentage points and 12.5 percentage points less than the decline in the first quarter respectively.

Private investment reached 15,786.7 billion yuan, down by 7.3%, 11.5 percentage points slower than the decline in the first quarter.

The investment in high-tech industries went up by 6.3%, while that in the first quarter went down by 12.1 percent; specifically, the investment in high-tech manufacturing industries and high-tech services went up by 5.8% and 7.2% respectively.

In terms of high-tech manufacturing, investment in pharmaceutical manufacturing and the manufacturing of computers and office devices grew by 13.6% and 8.2% respectively.

In terms of high-tech services, the investment in services for e-commerce services and commercialization of scientific and technological research findings grew by 32.0% and 21.8% respectively.

The investment in the social sector increased by 5.3%, while that declined by 8.8% in the first quarter.

Specifically, the investment in the health sector and education sector grew by 15.2% and 10.8% respectively, despite a decline of 0.9% and 4.0% in the first quarter. In June, the investment in fixed assets (excluding rural households) grew by 5.91% month on month.

Imports and Exports

In H1, the total value of imports and exports of goods was 14,237.9 billion yuan, a year-on-year decline of 3.2%, 3.3 percentage points slower than the decline in the first quarter; specifically, that in the second quarter dropped by 0.2%, and that in the first quarter dropped by 6.5%.

The total value of exports was 7,713.4 billion yuan, down by 3.0 percent; the total value of imports was 6,524.5 billion yuan, down by 3.3%. The trade balance was 1,188.9 billion yuan in surplus.

In H1, the import and export of general trade accounted for 60.1% of the total value of the imports and exports, an increase of 0.4 percentage points compared with that in the same period last year.

The exports of mechanical and electronic products accounted for 58.6% of the total value of exports, an increase of 0.5 percentage points compared with the same period last year.

In June, the total value of imports and exports was 2,697.3 billion yuan, a year-on-year increase of 5.1%. The total value of exports was 1,513.1 billion yuan, up by 4.3%, and the total value of imports was 1,184.2 billion yuan, up by 6.2%.

In H1, the export delivery value of industrial enterprises above the designated size reached 5,425.0 billion yuan, a year-on-year decline of 4.9%, 5.4 percentage points slower than the decline in the first quarter. In June, the export delivery value of industrial enterprises above the designated size shifted from a year-on-year decline of 1.4% in May to a growth of 2.6%.

Consumer Price

In H1, the consumer price went up by 3.8% year on year, 1.1 percentage points lower than that in the first quarter. Specifically, the price went up by 3.6% in urban areas and up by 4.7% in rural areas.

Grouped by commodity categories, prices for food, tobacco and alcohol went up by 12.2% year on year; clothing down by 0.1 percent; housing down by 0.1 percent; articles and services for daily use up by 0.1 percent; transportation and communication down by 3.2 percent; education, culture and recreation up by 2.0 percent; medical services and health care up by 2.1 percent; other articles and services up by 5.0%.

In terms of food, tobacco and alcohol prices, prices for grain went up by 1.0%, fresh vegetables up by 3.4 percent; pork up by 104.3%, 18.2 percentage points lower than that in the first quarter. Core CPI excluding the price of food and energy went up by 1.2%. In June, the consumer price went up by 2.5% year on year, and down by 0.1% month on month.

In H1, the producer prices for industrial products went down by 1.9% year on year. The figure in June dropped by 3.0% year on year, or up by 0.4% month on month. In H1, the purchasing prices for industrial producers went down by 2.6% year on year. The figure in June dropped by 4.4% year on year and up by 0.4% month on month.

Unemployment Rate

In H1, the newly increased employed people in urban areas totaled 5.64 million, accounting for 62.7% of the whole-year target.

In June, the surveyed unemployment rate in urban areas was 5.7%, 0.2 percentage point lower than that in May. Specifically, the surveyed unemployment rate of the population aged from 25 to 59 was 5.2%, 0.5 percentage point lower than that of the surveyed unemployment rate in urban areas, or 0.2 percentage point lower than that in May.

The urban surveyed unemployment rate in 31 major cities was 5.8%, 0.1 percentage point lower than that in the previous month. The employees of enterprises worked averagely 46.8 hours per week. By the end of the second quarter, the number of rural migrant workers reached 177.52 million.

Residents’ Real Income

In H1, the nationwide per capita disposable income of residents was 15,666 yuan, a nominal growth of 2.4% year on year, 1.6 percentage points faster than that in the first quarter, or a real decrease of 1.3% after deducting price factors, a decrease of which narrowed by 2.6 percentage points.

In terms of permanent residence, the per capita disposable income of urban households was 21,655 yuan, a nominal growth of 1.5%, or a real decrease of 2.0 percent.

The per capita disposable income of rural households was 8,069 yuan, a nominal growth of 3.7%, or a real decrease of 1.0%. By sources of income, the nationwide per capita wage income went up by 2.5% in nominal terms, net operating income down by 5.1%, net property income up by 4.2%, and net transfer income up by 8.2%.

The per capita disposable income of urban households was 2.68 times that of the rural households, 0.06 less than that of the same period last year. The median of the nationwide per capita disposable income was 13,347 yuan, a nominal increase of 0.5% year on year.

Check out retail sales and CPI here.

The CBs will have a coupon rate of 5% per annum and a tenure of three years, with an option to extend by two years at the election of PDD, according to a statement by GOME. The CBs are convertible at HK$1.215 per share, which works out to approximately 1.28 billion GOME shares or approximately 5.6% on a fully diluted basis.

“This strategic partnership is a win-win-win,” said Mr. David Liu, Vice President of Strategy at PDD. “Consumers win because they get a wider range of top domestic and international brands at competitive prices, GOME wins because they can broaden their access to our 585.2 million users, and PDD wins because we enhance our foothold in household appliances and electronics.”

The tie-up marks the first strategic investment by Pinduoduo and comes after its US$1.1 billion share placement to long-term investors in March, when it said it will use the proceeds to enhance user experience.

The partnership also strengthens the e-commerce platform’s position in household appliances and electronics while accelerating its push into consumer-led manufacturing.

As part of the partnership, PDD will help bring the entire GOME product range, including top domestic and international brands such as Siemens, Sony, Haier, Gree and Midea, onto Pinduoduo platform at competitive prices.

PDD will also help GOME’s digitization strategy, extending PDD’s technological capability to help the retailer upgrade its supply chain and tailor its product range to consumer needs and preferences.

GOME will integrate its logistics, delivery and assembly services with the PDD platform to enhance user satisfaction.

With GOME’s extensive network of stores across China, PDD users will be able to enjoy an extension of their user experience to try and experience the products before placing their orders.

The deal also furthers PDD’s push into the consumer-to-manufacturer (C2M) realm by working with GOME to source for products that are tailored to customers’ needs.

Founded in 2015, the Shanghai-based company has seen rapid growth as it builds on its strength in all product categories, including household appliances and electronics.

Pinduoduo exceeded RMB 1 trillion (US$144.6 billion) in GMV for the 12-month period ended December 31, 2019. The company saw a 40% increase in active buyers in the same period to 585.2 million, while annual spending per active buyer jumped 53%.

Alibaba launched a new app Taobao Special Offer in March 2020 to compete with Pinduoduo on C2M.

Pinduoduo and Taobao’s manufacturing strategies

By industry, the value added of the primary industry was 1,018.6 billion yuan, down by 3.2%; that of the secondary industry was 7,363.8 billion yuan, down by 9.6%; and that of the tertiary industry was 12,268.0 billion yuan, down by 5.2%.

Overall Agricultural Production

In Q1 2020, the value added of agriculture (crop farming) grew by 3.5% year on year.

By the end of March, the sown area of grade Ⅰ and grade Ⅱ seedling of winter wheat accounted for 87.2% of the total, 3.5 percentage points higher than that of the same period last year.

In Q1 2020, the output of eggs grew by 4.3%, and that of milk grew by 4.6 percent. The output of pork, beef, mutton and poultry was 18.13 million tons. The pig production capacity continued to get recovered.

By the end of Q1 2020, 321.20 million pigs were registered in stock, up by 3.5% over the end of the Q4 2019, among which 33.81 million were breeding sows, up by 9.8%.

Industrial Production Dropped

In Q1 2020, the total value added of the industrial enterprises above the designated size went down by 8.4% year on year.

Specifically, in March, the total value added of the industrial enterprises above the designated size went down by 1.1% year on year, or 12.4 percentage points lower than the decline of the first two months, while the month-on-month growth was 32.13%, with the industrial output approaching the level of the same period last year.

An analysis by types of ownership showed that the value added of the state holding enterprises dropped by 6.0% year on year; that of share-holding enterprises down by 8.4 percent; that of enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan down by 14.5 percent; and that of private enterprises down by 11.3 percent.

In terms of sector:

• the value added of mining went down by 1.7%
• manufacturing down by 10.2%
• the production and supply of electricity, thermal power, gas and water down by 5.2 percent.
• The output of natural gas, non-woven fabrics, chemical medicine materials, crude oil, ten kinds of nonferrous metal, ethylene and crude steel went up by 9.1%, 6.1%, 4.5%, 2.4%, 2.1%, 1.3% and 1.2% respectively.
• The output of automatic vending and ticket machines, electronic components, integrated circuits, urban rail vehicles, and solar cells went up by 35.3%, 16.2%, 16.0%, 13.1% and 3.4% respectively.

In March, the high-tech manufacturing went up by 8.9% year on year, among which, the manufacturing of computers, communication equipment, and other electronic equipment went up by 9.9 percent.

The output of industrial robots and power generation equipment went up by 12.9% and 20.0% respectively.

Service Production Dropped

In Q1 2020, the total value added of the tertiary industry dropped year on year, while that of the information transmission, software and information technology services and that of financial intermediation went up by 13.2% and 6.0% respectively.

In March, the Index of Services Production dropped by 9.1%, 3.9 percentage points lower than the decline of the first two months.

In the first two months, the business revenue of service enterprises above the designated size dropped by 12.2%, among which, that of internet and related services and that of software and information technology services went up by 10.1% and 0.7% respectively.

In March, the Business Activity Index for services was 51.8%, 21.7 percentage points higher than last month.

Specifically, the Business Activity Index for transportation, storage and post, retail trades and monetary and financial services was relatively high, reaching 59.3%, 60.6% and 62.9% respectively.

In terms of market expectation, the Business Activities Expectation Index for service was 56.8%, 17.1 percentage points higher than last month, showing greater confidence of enterprises for market development.

Investment Growth Slowed

In Q1 2020, the investment in fixed assets (excluding rural households) reached 8,414.5 billion yuan, down by 16.1% year on year, 8.4 percentage points lower than the decline of the first two months.

Specifically, the investment in infrastructure, manufacturing, and real estate development declined by 19.7%, 25.2%, and 7.7% respectively, 10.6 percentage points, 6.3 percentage points and 8.6 percentage points lower than the decline of the first two months.

The floor space of commercial buildings sold reached 219.78 million square meters, down by 26.3 percent; and the total sales of commercial buildings were 2,036.5 billion yuan, down by 24.7%, the decline of which was narrowed by 13.6 percentage points and 11.2 percentage points compared to that of the first two months respectively.

By industry, the investment in the primary industry went down by 13.8 percent; the secondary industry down by 21.9 percent; the tertiary industry down by 13.5 percent; and the private investment reached 4,780.4 billion yuan, down by 18.8 percent.

The decline was narrowed by 11.8 percentage points, 6.3 percentage points, 9.5 percentage points and 7.6 percentage points respectively compared to that of the first two months.

The investment in the high-tech industry declined by 12.1%, 4.0 percentage points lower than that of the total investment.

Of the total, the investment in high-tech manufacturing and high-tech services went down by 13.5% and 9.0% respectively. In terms of high-tech manufacturing, the investment in manufacturing of computer and office equipment grew by 3.2 percent.

In terms of high-tech services, the investment in e-commerce services went up by 39.6%, that in professional technical services up by 36.7%, and that in services for commercialization of research findings up by 17.4%.

The investment in social sectors went down by 8.8%, among which, the investment in health sector dropped by 0.9%, or 15.2 percentage points lower than the decline of the total investment.

Investment in the manufacturing of biological medicines and products and other anti-epidemic related industries maintained growth, and construction of key projects for epidemic prevention accelerated.

In March 2020, the investment in fixed assets (excluding rural households) grew by 6.05% month on month.

Imports and Exports of Goods Slowed Down

In Q1 2020, the total value of imports and exports of goods was 6,574.2 billion yuan, down by 6.4% year on year.

In March, the total value of imports and exports was 2,445.9 billion yuan, down by 0.8% year on year, a decline slowed by 8.7 percentage points compared to that of the first two months.

Of the total, the value of exports was 1,292.7 billion yuan, down by 3.5 percent; the value of imports was 1,153.2 billion yuan, up by 2.4%, with import of general trade growing by 4.0 percent.

In Q1 2020, the total value of exports was 3,336.3 billion yuan, down by 11.45%; the total value of imports was 3,238.0 billion yuan, down by 0.75%.

The trade balance was 98.3 billion yuan in surplus. The import and export of general trade accounted for 60.0% of the total value of the imports and exports, an increase of 0.4 percentage points compared with the same period last year.

In Q1 2020, the export delivery value of industrial enterprises above the designated size reached 2,408.2 billion yuan, down by 10.3% year on year, 8.8 percentage points lower than the decline of the first two months.

In March, the export delivery value of industrial enterprises above the designated size reached 1,030.7 billion yuan, up by 3.1 percent.

Growth of Consumer Price Declined

In Q1 2020, China CPI went up by 4.9% year on year. Check out details here.

In Q1 2020, the producer prices for industrial products went down by 0.6% year on year.

Specifically, the prices in March dropped by 1.5% year on year, 1.1 percentage points faster than the year-on-year decline in the first two months, or down by 1.0% month on month.

In Q1 2020, the purchasing prices for industrial producers went down by 0.8% year on year; specifically in March, the prices dropped by 1.6% year on year, or down by 1.1% month on month.

Surveyed Unemployment Rate in Urban Areas Dropped

In Q1 2020, the newly increased employed people in urban areas totaled 2.29 million according to NBS.

In March, the surveyed unemployment rate in urban areas was 5.9%, 0.3 percentage points lower than that of February.

Specifically, the surveyed unemployment rate of population aged from 25 to 59 was 5.4%, 0.5 percentage points lower than the surveyed unemployment rate in urban areas, 0.2 percentage points lower than that of last month.

The urban unemployment rate in 31 major cities was 5.7%, the same as the previous month. In March, the employees of enterprises worked averagely 44.8 hours per week, 4.6 hours more than last month. By the end of February, the number of rural migrant workers reached 122.51 million.

China per capita income down 3.9% in Q1 2020; and, retail sales down 19%.

Xiaomi’s monthly active users (“MAU”) of MIUI reached 278.7 million, an increase of 34.7% YoY. AI assistant “ Xiao’ai ” had 49.9 million MAU; Xiaomi ranked 4th globally in terms of smartphone shipments; and, global shipments of its smart TVs reached 2.7 million units.

Xiaomi financial performance

In the second quarter of 2019, Xiaomi recorded RMB52.0 billion in revenue, representing an increase of 14.8% over the corresponding period of 2018. Gross profit margin increased to 14.0% from the 12.5% achieved in the corresponding period of 2018. Adjusted Net Profit increased by 71.7% to RMB3.6 billion. As of June 30, 2019, its total cash resources amounted to RMB51.1 billion.

The “Smartphone + AIoT” dual-engine strategy that Xiaomi adopted at the beginning of the year has borne fruit. Its user base has continued to expand and the number of devices connected to its platform has continued to grow.

In June, 2019, monthly active users (“MAU”) of MIUI reached 278.7 million, an increase of 34.7% over the corresponding period of 2018. The number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached approximately 196 million units as of June 30, 2019, representing year-over-year growth of 69.5%.

Meanwhile, its AI assistant “ Xiao’ai ” had 49.9 million MAU in June 2019, representing a year-over-year increase of 88.3%.

Xiaomi has won a number of international recognitions in 2019 to date. It took Xiaomi only 9 years to debut on the Fortune Global 500 list of 2019, becoming the youngest company on the list this year. Furthermore, Xiaomi made it into the 2019 BrandZ Top 100 Most Valuable Global Brands ranking for the first time, ranking 74th with a brand value of US$19.8 billion. Xiaomi has also been recognized as one of the 2019 Forbes China’s 50 Most Innovative Companies.

Xiaomi Smartphones

Its smartphone segment recorded RMB32.0 billion in revenue in the second quarter of 2019, representing an increase of 5.0% over the corresponding period of 2018. Its smartphone sales volume in the second quarter of 2019 reached 32.1 million units.

According to Canalys, Xiaomi ranked 4th globally in terms of smartphone shipments during the second quarter of 2019 and its market share in terms of global smartphone shipments increased from 9.5% in the second quarter of 2018 to 9.7% in Q2 2019.

Both its Xiaomi brand, which focuses on pioneering advanced technologies, establishing itself in the mid- to high-end markets, and building online and offline new retail channels, and its Redmi brand, which is positioned to pursue the ultimate price-performance ratio and focus on online channels have performed well.

After the launch of the new flagship model K20 series under the Redmi brand, Xiaomi has established a comprehensive Redmi smartphone product portfolio that covers a wide price range. In particular, the global sales volume of the Redmi Note 7 series reached 20 million units as of the date of this announcement, achieving this milestone in only around 7 months since its launch on January 10, 2019.

In addition, the global shipments of the K20 series already recorded more than 1 million units within the first month of its launch.

On July 2, 2019, Xiaomi launched the CC series under the Xiaomi brand, which includes Mi CC9, Mi CCe9, and Mi CC9 Meitu Edition. The CC series is positioned as a fashionable series targeting younger customers. The CC series places an emphasis on being visually appealing in terms of both form and function, offering stylish product design and enhanced photography experience.

Mi CC9 Meitu Edition is a joint development with Meitu Inc. which specifically targets the female user market. Leveraging its product development and supply chain management capabilities, as well as Meitu’s image-related algorithms and its deep understanding of female users, the Mi CC9 Meitu Edition offers outstanding photographic experiences and builds a solid foundation for its ongoing expansion into more diversified user markets.

Its products have been strongly recognized by the market as a result of the successful implementation of its multi-brand strategy. The average selling price (“ASP”) of its smartphones has continued to increase, achieving year-over-year growths of 13.3% and 6.7% in mainland China and overseas markets, respectively. In Q2 2019, the revenue generated by smartphones sold for RMB2,000 or more accounted for 32.3% of the total revenue of the smartphones segment.

Following the granting of 5G business licenses in mainland China, 5G technology has officially started to be implemented for commercial use. The commercialization of 5G technology could potentially lead to a new smartphone replacement cycle and boost the overall demand of the domestic market.

Xiaomi established a research and development team back in 2016 for advanced research on 5G technology and are now well-prepared for the commercialization of 5G. The Mi MIX 3 5G, its first 5G model was already available in various European countries, and its second 5G smartphone model will also be launched in China in the second half of the year.

The gross profit margin of its smartphone segment increased from 3.3% in the first quarter of 2019 to 8.1% in Q2 2019. During the early transition period from 4G to 5G technology, Xiaomi will continue to invest in research and development of relevant technologies while remaining prudent with its cash flows and profitability.

IoT and lifestyle products

In Q2 2019, the revenue of the IoT and lifestyle products segment rose by 44.0% to RMB14.9 billion over the corresponding period of 2018. Its smart TV business continues to have a leading edge in both mainland China and overseas markets.

Global shipments of its smart TVs reached 2.7 million units, representing year-over-year growth of 41.1%. According to AVC, Xiaomi ranked 1st in terms of TV shipments in mainland China for the six months ended June 30, 2019.

Xiaomi ranked 1st in terms of smart TV shipments in India for five consecutive quarters as of the second quarter of 2019. With its efforts in expanding its smart TVs globally, Xiaomi achieved a top 5 position in terms of global TV shipments for the six months ended June 30, 2019, according to AVC.

Xiaomi has positioned large home appliances as an important element of its AIoT strategy. Xiaomi will focus on innovation and product design, offering intelligent user experiences and promoting the enhanced connectivity and compatibility of its smart home appliances.

For the six months ended June 30, 2019, the shipments of its air conditioners amounted to approximately 1 million units. At the same time, Xiaomi has also entered the smart kitchen appliances market.

In Q2 2019, Xiaomi continued to enrich its IoT product portfolio. The market share of its laptops has been steadily increasing following the launch of its new products. On May 28, 2019, the Redmi brand introduced its first 14” slim notebook and enjoyed widespread popularity.

According to IDC Consulting (Beijing), the market share of its laptops in mainland China in terms of shipments increased from 5.5% in the second quarter of 2018 to 8.7% in Q2 2019. Its Mi Band ranked 1st in the global wearables market in terms of shipments in the first quarter of 2019.

Meanwhile, the Mi Band 4 recorded shipments of more than 1 million units within 8 days of its launch on June 14, 2019. In addition, Xiaomi has also launched several new products, including its AI Translator “Xiao’Ai Teacher”, Mi Smart Door Lock and Mi Smart Combo Wash and Dryer Pro, which are supported by its AI assistant “Xiao’Ai”. These product launches illustrated its continuous
the pursuit of excellent product design and quality.

Xiaomi has continued to improve the device-to-device interaction and enhance its users’ smart home experience. For example, when a user opens the door through a Mi Smart Door Lock, its
AI assistant will welcome him/her home. At the same time, the Mi Air Purifier, Mi Air Conditioner, and other smart devices could be switched on automatically. The Mi Smart Combo Wash Dryer Pro can be operated by the voice control function through its AI assistant

Xiaomi Internet services

In the second quarter of 2019, its user base continued to expand. The MAU of MIUI rose by 34.7% year-over-year from 206.9 million in June 2018 to 278.7 million in June 2019. The MAU of MIUI in mainland China was 115.1 million in June 2019. The MAU of its smart TVs and Mi Box achieved 53.8% year-over-year growth, reaching 22.6 million in June 2019.

Revenue from its internet services segment grew by 15.7% year-over-year to RMB4.6 billion in Q2 2019. Advertising revenue slightly decreased by 0.6% year-over-year to RMB2.5 billion due to a soft mainland China advertising market, particularly due to reduced advertising spending from other internet companies which contributed a meaningful portion of its advertising revenue.

Over the course of the last few quarters, Xiaomi has continued executing its strategy to diversify its advertising customer base. Through expanding into more vertical industries, such as finance and small and medium-sized enterprises, Xiaomi is developing a more robust and healthy advertising business to capture more future growth.

Revenue from gaming decreased by 4.1% year-over-year to RMB675.1 million. However, its gaming gross profit increased to RMB408.2 million in Q2 2019 from RMB212.5 million in Q2 2018, representing an increase of 92.1%. Its gaming gross profit margin increased from 30.2% in Q2 2018 to 60.5% in Q2 2019 as Xiaomi optimized its gaming distribution and had higher gaming revenue growth from content providers with a high gross profit margin. Its other internet value-added services grew by 89.9% year-over-year to RMB1.4 billion, primarily due to the strong growth in revenue from its fintech business and Youpin e-commerce platform.

Introduction to Xiaomi’s e-commerce platform Youpin

Xiaomi has been focusing on enriching its internet services and content to strengthen its advertising business. Many of its internet services are leading on its smartphones, its Mi App Store, Mi Browser, Mi Security, and Mi Music ranked 1st and Mi Video ranked 2nd in their respective categories in mainland China in terms of MAU on its smartphones in June 2019.

Furthermore, its news feed service ranked 1st in terms of MAU on its smartphones in mainland China, reaching 71.0 million MAU in June 2019, representing a year-over-year increase of 31.0%. Its search service also ranked 1st on its smartphones in mainland China in terms of search query volume in the second quarter of 2019.

Xiaomi developed various entry points for its search function, including browser, negative one screen, launcher searchbox, and its AI assistant. Leveraging its increasingly diversified services and
multi-dimensional data, Xiaomi is able to further improve its algorithm and enhance its users’ experience. Services like news feed and search allow Xiaomi to diversify its advertising customer base.

Internet service revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 108.8% over the corresponding quarter in 2018, accounting for 36.0% of the total internet service revenue in the second quarter of 2019.

For the six months ended June 30, 2019, the gross merchandise volume (“GMV”) of its Youpin e-commerce platform grew to RMB3.8 billion, an increase of 113.9% YoY. In June 2019, more than 65% of Youpin’s GMV came from non-Xiaomi smartphone users.

Revenue from its fintech business increased to RMB792.0 million in Q2 2019, representing year-over-year growth of 62.7%. Its current fintech business focuses on consumer loans and supply chain financing. With its sophisticated risk management model and technology capability, and extensive user base and supply chain partners, Xiaomi had a solid business foundation and potential to grow. In the meanwhile, Xiaomi is also actively exploring other fintech business opportunities.

Its TV internet services are also fast-growing and increasingly diversified. TV internet services revenue is mainly generated from advertising, paid subscription, and app distribution. In June 2019, Xiaomi had over 3 million paid subscribers, representing a year-over-year increase of 83.1%. Xiaomi offers a variety of membership services, including video membership, sports memberships, and children membership. Its subscription services have expanded to other non- Xiaomi TVs to serve a wider user base.

Xiaomi’s Overseas markets

With the overseas expansion of its smartphone business, its overseas internet service revenue also increased significantly. Xiaomi continued to build and strengthen its service offerings in overseas markets. In June 2019, its browser ranked 1st among all browsers in India in terms of MAU on its smartphones. In the second quarter of 2019, the average revenue per user (“ARPU”) in overseas markets recorded a year-over-year increase of 133.0%.

Xiaomi has maintained strong growth in the overseas markets in the second quarter of 2019. Its revenue from the overseas markets grew 33.1% year-over-year to RMB21.9 billion in the second quarter of 2019.

Xiaomi will continue to build and expand its new retail channels in the overseas markets. As of June 30, 2019, there were a total of 520 Mi Home stores overseas, representing a 92.6% year-over-year growth, of which 79 stores were located in India. Furthermore, in India, Xiaomi had more than 1,790 Mi Stores that cater to tier two and rural areas of India as of June 30, 2019.

According to Canalys, in the second quarter of 2019, Xiaomi ranked among the top five in over 40 countries and regions in terms of smartphone shipments. According to IDC, its smartphones have ranked 1st in India in terms of shipments for eight consecutive quarters. In addition, according to Canalys, in Q2 2019, Xiaomi ranked 4th in terms of smartphone shipments for Western Europe, representing a year-over-year increase of 53.2%.

Xiaomi ranked 2nd in open market channels in Spain in terms of smartphone shipments in Q2 2019. Xiaomi has been developing operator channels in Europe. Its flagship smartphones, such as Mi MIX 3 and Mi 9 series, have been launched in operator channels in the United Kingdom, France, Spain, Italy, and Switzerland.

AIoT

In Q2 2019, Xiaomi continued the implementation of its “Smartphone + AIoT” dual-engine strategy and its AIoT platform continued to maintain its leading position. As of June 30, 2019, the number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached approximately 196 million units, representing a year-over-year increase of 69.5%.

The number of users who have five or more devices connected to Xiaomi’s IoT platform (excluding smartphones and laptops) increased to approximate 3 million, representing a year-over-year increase of 78.7%. In the six months ended June 30, 2019, the shipments of its AI speakers exceeded 4 million units.

In June 2019, its AI assistant had 49.9 million MAU, making it one of the most used AI voice interactive platforms in China. In June 2019, 45% of its AI speaker MAU used voice control to interact with their IoT devices at least once that month.

Xiaomi continued to open up its AIoT platform to build a more vibrant AIoT ecosystem. Its Mi Home app had 30.4 million MAU in the second quarter of 2019 and more than half of the MAU in mainland China were from non-Xiaomi smartphone users. Xiaomi will continue to invest in the development of its open AIoT platform to attract more third parties and users to join this AIoT platform.

The Group’s AIoT Strategy committee will further enhance the development of its AIoT technology, by building a comprehensive AIoT ecosystem, strengthening its research and development, and realizing synergies across business units to improve its smart devices’ connectivity and user experiences.

For example, Xiaomi continues to develop technologies for files to be seamlessly transferred between its smartphones and laptops, as well as for intelligent projection to be enabled between its smartphones and smart TVs.

Xiaomi’s Investments

As of June 30, 2019, Xiaomi invested in a total of over 270 companies with an aggregated book value of RMB28.7 billion, representing year-over-year growth of 20.8%. Xiaomi also expanded its investment into supply chain companies to strengthen its partnership with key component suppliers and to enhance its abilities in advanced technology sourcing and manufacturing.

As of the date of this announcement, Xiaomi invested in 12 supply chain companies. Among those, three of the investee companies were listed on the STAR Market in China. Xiaomi believes its investments not only allowed Xiaomi to establish close partnerships with the investee companies but also provided Xiaomi with recurring investment income.

In the second quarter of 2019, Xiaomi generated net gains on disposal of investments (after tax) of RMB551.8 million.

The gross domestic product (GDP) of China was 45,093.3 billion yuan (US$6,565.68 billion) in the first half of 2019, a year-on-year increase of 6.3% at comparable prices according to the preliminary estimates of National Bureau of Statistics of China. The year-on-year GDP growth for the first quarter was 6.4 percent, and 6.2% for the second quarter.

The value-added of the primary industry was 2,320.7 billion yuan, a year-on-year growth of 3.0%; the secondary industry was 17,998.4 billion yuan, a year-on-year growth of 5.8%; and the tertiary industry was 24,774.3 billion yuan, a year-on-year growth of 7.0%.

Agricultural Production

In the first half of 2019, the value-added of crop farming grew by 3.9% year on year, 0.5 percentage point slower than the first quarter. The overall output of summer grain was 141.74 million tons, an increase of 2.93 million tons over last year, up by 2.1 percent, hitting the highest record as that of 2017.

The structure of crop farming was further optimized, as planting area for cotton and soybean increased. In the first half, the output of eggs grew by 3.6% year on year, and that of milk grew by 1.7%. The output of pork, beef, mutton, and poultry was 39.11 million tons, down by 2.1 percent, among which, the output of beef, mutton and poultry grew by 2.4 percent, 1.5% and 5.6% year on year respectively, while the output of pork went down by 5.5%.

Industrial Production

In the first half, the year-on-year growth rate of total value added of the industrial enterprises above the designated size was 6.0 percent, 0.5 percentage point slower than the first quarter.

In June, the year-on-year growth rate of total value added of the industrial enterprises above the designated size was 6.3 percent, 1.3 percentage points faster than that of May, up by 0.68% month on month.

An analysis by types of ownership showed that the value-added of the state holding enterprises went up by 5.0% year on year; that of share-holding enterprises up by 7.3%; and enterprises funded by foreign investors or investors from Hong Kong, Macao, and Taiwan up by 1.4%.

In terms of sectors, the value-added of the mining grew by 3.5% year on year, the manufacturing grew by 6.4% and the production and supply of electricity, thermal power, gas, and water grew by 7.3%. The value-added of strategic emerging industries grew by 7.7 percent, 1.7 percentage points faster than that of the industrial enterprises above the designated size.

The value-added of high-tech manufacturing grew by 9.0 percent, 3.0 percentage points faster than that of the industrial enterprises above the designated size, accounting for 13.8% of the total value added of the industrial enterprises above the designated size, 0.8 percentage point higher than that of the same period last year.

The output of new energy vehicles and solar cells grew by 34.6% and 20.1% year on year.

In the first five months of 2019, the total profits made by industrial enterprises above the designated size was 2,379.0 billion yuan, down by 2.3% year on year, 1.1 percentage points less than that of the first four months. The profits of industrial enterprises above the designated size in May grew by 1.1 percent, while that for April was down by 3.7% year on year.

The profit rate of the business revenue of industrial enterprises above the designated size was 5.72 percent, 0.2 percentage point higher than that of the first four months in 2019.

Service Sector Grew Fast

In the first half, the service sector maintained good momentum. The value-added of information transmission, software, and information technology services, that of leasing and business services, that of transport, storage and postal services, and that of financial intermediation grew by 20.6 percent, 7.8 percent, 7.3% and 7.3% year on year respectively, or 13.6 percentage points, 0.8 percentage point, 0.3 percentage point and 0.3 percentage point faster than that of the tertiary industry.

In the first half of 2019, the Index of Services Production increased by 7.3% year on year, 0.1 percentage point lower than that of the first quarter; specifically, that for June grew by 7.1 percent, 0.1 percentage point faster than that of May.

In June, the Business Activity Index for services was 53.4 percent, continuing to stay above the 50-point mark separating growth from contraction. The Business Activities Expectation Index for services was 60.3 percent, staying at a high level.

In the first five months, the business revenue of service enterprises above the designated size increased by 10.1% year on year, 0.3 percentage point faster than that of the first four months; specifically, the business revenue of strategic emerging services, high-tech services and technology services demonstrated fast growth, which increased by 12.5 percent, 12.3% and 12.0% respectively, or 2.4 percentage points, 2.2 percentage points and 1.9 percentage points faster than the growth of the service enterprises above the designated size.

Market Sales Demonstrated a Stable and Rising Trend with Higher Growth Rate and Share for Online Retail Sales

Investment Witnessed Steady Growth and the Investment in High-tech Industries Grew Fast

In the first half, the investment in fixed assets (excluding rural households) reached 29,910.0 billion yuan, up by 5.8% year on year, 0.2 percentage point faster than that of the first five months, or 0.5 percentage point slower than that of the first quarter.

Specifically, the private investment reached 18,028.9 billion yuan, up by 5.7%. The investment in the primary industry went down by 0.6%; the secondary industry went up by 2.9 percent, among which, that in manufacturing went up by 3.0%; the tertiary industry went up by 7.4 percent, among which, that in infrastructure was up by 4.1%.

The investment in the high-tech manufacturing industry increased by 10.4 percent, 4.6 percentage points faster than the total investment; the investment in high-tech services went up by 13.5 percent, 7.7 percentage points faster than the total investment. In June, the investment in fixed assets (excluding rural households) grew by 0.44% month on month.

In the first half, the total investment in real estate development was 6,160.9 billion yuan, up by 10.9 percent, or 0.9 percentage point slower than that of the first quarter. The floor space of commercial buildings sold reached 757.86 million square meters, down by 1.8% year-on-year. The total sales of commercial buildings were 7,069.8 billion yuan, up by 5.6 percent, maintaining the same speed as that of the first quarter.

Imports and Exports Showed Slight Growth

In the first half, the total value of imports and exports of goods was 14,667.5 billion yuan, a year-on-year increase of 3.9 percent, 0.2 percentage point faster than the first quarter.

The total value of exports was 7,952.1 billion yuan, up by 6.1%; the total value of imports was 6,715.5 billion yuan, up by 1.4%. The trade balance was 1,236.6 billion yuan in surplus, up by 41.6% year on year.

The import and export of general trade increased by 5.5 percent, accounting for 59.9% of the total value of the imports and exports, an increase of 0.9 percentage point compared with the same period last year.

The exports of mechanical and electrical products increased by 5.3 percent, accounting for 58.2% of the total value of exports. The total value of imports and exports by private enterprises increased by 11.0 percent, accounting for 41.7% of the total value, 2.7 percentage points higher than the same period last year.

In June, the total value of imports and exports was 2,561.9 billion yuan, a year-on-year increase of 3.2%. The total value of exports was 1,453.5 billion yuan, up by 6.1 percent, and the total value of imports was 1,108.3 billion yuan, down by 0.4%.

In the first half, the export delivery value of industrial enterprises above the designated size reached 5,836.1 billion yuan, a year-on-year increase of 4.2%. In June, the export delivery value of industrial enterprises above the designated size reached 1,055.5 billion yuan, up by 1.9 percent, 1.2 percentage points faster than that of May.

Consumer Price

In the first half, the consumer price went up by 2.2% year on year, 0.4 percentage point faster than the first quarter.

Specifically, the price went up by 2.2% both in the urban and rural areas. Grouped by commodity categories, prices for food, tobacco and alcohol went up by 3.9% year on year; clothing up by 1.8%; housing up by 2.0%; articles and services for daily use up by 1.1%; transportation and communication down by 1.0%; education, culture and recreation up by 2.5%; medical services and health care up by 2.6%; other articles and services up by 2.2%.

In terms of food, tobacco and alcohol prices, prices for grain went up by 0.5 percent, pork up by 7.7 percent, fresh vegetables up by 9.2%. Core CPI excluding the price of food and energy went up by 1.8% year on year, 0.1 percentage point lower than that of the first quarter.

In June, the consumer price went up by 2.7% year on year, increasing at the same speed as last month, and down by 0.1% month on month.

In the first half of 2019, the producer prices for industrial products went up by 0.3% year on year, 0.1 percentage point faster than the first quarter. In June, the producer prices for industrial products were unchanged compared with the same period last year, down by 0.3 percentage month on month.

In the first half, the purchasing prices for industrial producers went up by 0.1% year on year, increasing at the same speed as the first quarter. In June, the prices dropped by 0.3% year on year and down by 0.1% month on month.

Employment

In the first half, the newly increased employed people in urban areas totaled 7.37 million, accounting for 67% of the whole-year target. In June, the surveyed unemployment rate in urban areas was 5.1 percent, 0.1 percentage point higher than the previous month.

Specifically, the surveyed unemployment rate of the population aged from 25 to 59 was 4.6 percent, 0.5 percentage point lower than that of the surveyed unemployment rate in urban areas. The urban surveyed unemployment rate in 31 major cities was 5.0 percent, the same as the previous month.

In June, the employees of enterprises worked averagely 45.7 hours per week. At the end of the second quarter, the number of rural migrant workers reached 182.48 million, an increase of 2.26 million over the same period last year, up by 1.3 percent, and 0.1 percentage point faster than the first quarter.

Residents Income Grew Faster than Economic Growth and Urban-Rural Income Ratio Continued to Narrow Down.

In the first half, the nationwide per capita disposable income of residents was 15,294 yuan, a nominal growth of 8.8% year on year, 0.1 percentage point faster than that of the first quarter; the real increase was 6.5% after deducting price factors, 0.2 percentage point higher than the economic growth.

In terms of permanent residence, the per capita disposable income of urban households was 21,342 yuan, real growth of 5.7%. The per capita disposable income of rural households was 7,778 yuan, real growth of 6.6%.

The per capita disposable income of urban households was 2.74 times of the rural households, 0.03 less than that of the same period last year. The median of the nationwide per capita disposable income was 13,281 yuan, a nominal increase of 9.0% year-on-year.

Views from Global Media

• Bloomberg: China’s Debt Ratio Is Growing as Its Economy Loses Steam
• Reuters: China second-quarter GDP growth slows to 27-year low as trade war bites, more stimulus seen
• FT: China’s economy grows at slowest rate in nearly 30 years

China’s leading internet companies such as Baidu, Alibaba, and Tencent, a.k.a. BAT, also compete in the investment. In 2018, companies received around 2.6 billion yuan investment from Baidu, over 12.7 billion yuan from Tencent, and near 40 billion yuan from Alibaba.

The 2.1 billion yuan ($302 million) strategic round in Xinchao Media, an elevator advertising firm, was Baidu’s biggest investment in this field.

Tencent joined US$2.5 billion round for WPP and co-led the US$1.9 billion series-F funding for Manbang Group, a truck-hailing platform dubbed “Uber for trucks”. It also invested 1.266 billion yuan and 1.267 billion yuan (US$199.24 million) in DHC Software and DHC Chengxin, respectively.

Alibaba led the 15 billion yuan (US$2.2 billion) investment for the digital advertising service provider Focus Media. It acquired ZTEsoft Technology from the telecommunications equipment manufacturer ZTE and C-SKY Microsystems the developer of embedded CPUs with a record amount of spending.

Furthermore, Alibaba invested several leading AI-focused companies, such as SenseTime Technology, Video++, and Face++ with no less than 4 billion yuan.

Overall, they are all focused on the technical fundamentals of industrial internet, such as artificial intelligence (AI), cloud computing, big data, and internet of things (IoT).

In 2018, company service (17%), health care (13%), manufacture (12%), AI (12%), and transportation (9%) made up 63% of Baidu’s total investments.

Company services (15%), transportation (11%), AI (7%), health care (6%) accounted for 39% of Alibaba’s total investments. Company services (11%) and transportation (8%) represented 19% of Tencent’s total investments.

Baidu has empowered AI technology in different industries to promote the smart industry. Alibaba integrates its e-commerce, finance, and cloud computing resources to help industries’ digitalization transformation. Tencent assists enterprises to digitalize infrastructure from cloud computing, AI, security, and LBS, etc.

The gross domestic product (GDP) of China was 18,068.3 billion yuan (US$2,626.81 billion) in the first quarter of 2017, a year-on-year increase of 6.9% at comparable prices according to the preliminary estimates of National Bureau of Statistics of China.

The planting intention survey on 110,000 rural households showed that the planting area intended for rice went down by 0.3%; wheat down by 0.8%; corn down by 4.0%; soya up by 8.1%; and cotton down by 0.7%.

The output of pork, beef, mutton and poultry was 22.49 million tons, a year-on-year growth of 0.2 percent, among which the output of pork was 14.68 million tons, up by 0.2 percent. The number of pigs registered was 410.95 million, a year-on-year growth of 0.1 percent and 191.49 million pigs slaughtered, a year-on-year growth of 0.2 percent.

In Q1 2017, the year-on-year real growth rate of total value added of the industrial enterprises above designated size was 6.8%, 1.0 percentage point faster than Q1 2016; 0.8 percentage point faster than 2016.

An analysis by types of ownership showed that the value added of the state holding enterprises went up by 6.2% year on year; collective enterprises up by 0.5%; share-holding enterprises up by 6.9%; and enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan up by 6.9%.

In terms of sectors, the value added of the mining dropped by 2.4 percent on a year-on-year basis, the manufacturing grew by 7.4 percent and the production and supply of electricity, thermal power, gas, and water grew by 8.9 percent.

The industrial structure continued to improve. The value added of high-tech industry and equipment manufacturing industry grew by 13.4% and 12.0% year on year respectively, 6.6 percentage points and 5.2 percentage points faster than that of the industrial enterprises above designated size as a whole, 2.6 percentage points and 2.5 percentage points higher than the whole of last year.

The sales-output ratio of the industrial enterprises above designated size reached 97.2%. In March 2017, the total value added of the industrial enterprises above designated size went up by 7.6% year on year, 1.3 percentage points faster than that in the first two months of 2017, or up by 0.83 percentage point month on month.

The index of national services production increased by 8.3% year on year, 0.1 percentage point higher than Q1 2016. Information transmission, software and information technology services, and transport, storage and postal services maintained high growth rates.

The growth rates of wholesale, retail trade, accommodation, and catering trade picked up considerably. In March 2017, the business activity index for sectors like retail trade, air transport, postal services, internet and software information technology services, monetary and financial services, capital market services, and insurance all kept within the expansion range of over 55%.

The investment in fixed assets (excluding rural households) was 9,377.7 billion yuan (US$1,361.35 bn) in Q1 2017, a year-on-year growth of 9.2%, 1.1 percentage points faster than the whole year of 2016, 0.3 percentage point faster that than in the first two months of 2017.

The investment by the state holding enterprises reached 3,308.7 billion yuan (US$480.32 bn), up 13.6%; private investment reached 5,731.3 billion yuan, up by 7.7%.

The investment in infrastructure was 1,899.7 billion yuan, an increase of 23.5%. The investment in high-tech industry increased by 22.6%, 13.4 percentage points faster than the total investment. The funds in place for investment in fixed assets in the first quarter were 10,608.1 billion yuan, down by 2.9 percent. The total investment in newly-started projects was 6,201.5 billion yuan, a drop of 6.5% year on year. .

The total investment in real estate development in the first quarter was 1,929.2 billion yuan, a year-on-year growth of 9.1 percent, 2.2 percentage points faster than last year, and 0.2 percentage point faster than the first two months. The investment in residential buildings went up by 11.2%. The floor space started was 315.60 million square meters, up by 11.6% year on year. Specifically, the floor space of residential buildings newly started went up by 18.1%.

The floor space of commercial buildings sold was 290.35 million square meters, up by 19.5%. The floor space of residential buildings sold was up by 16.9%. The total sales of commercial buildings were 2,318.2 billion yuan, a growth of 25.1 percent. The sales of residential buildings were up by 20.2 percent. The land space purchased for real estate development was 37.82 million square meters, up by 5.7 percent year on year.

The total retail sales of consumer goods in China reached 8,582.3 billion yuan (US$1,245.89 bn) in Q1 2017, a year-on-year rise of 10.0%, 0.4 percentage point less than the whole of last year.

The total value of imports and exports in Q1 2017 was 6,198.6 billion yuan (US$899.85 bn), an increase of 21.8% year on year. The total value of exports was 3,326.8 billion yuan, up by 14.8%; the total value of imports was 2,871.8 billion yuan, an increase of 31.1%. The trade balance was 454.9 billion yuan in surplus.

The export of mechanical and electronic products increased by 15.1%, accounting for 58.1% of the total value of exports. The imports from and exports to some countries along One Belt, One Road went up. The exports to Russia, Pakistan, Poland, Kazakhstan and India increased by 37.0%, 18.7%, 19%, 69.3%, and 27.7%.

The consumer price in China went up by 1.4% year on year in Q1 2017, 0.7 percentage point less than the same period of last year.

The national per capita disposable income was 7,184 yuan (US$1,042.9), a nominal growth of 8.5% year on year or a real growth of 7.0% after deducting price factors. The growth rate of income was 0.1 percentage point higher than that of GDP.

The per capita disposable income of the urban residents was 9,986 yuan (US$1,449.66), a real growth of 6.3 percent after deducting price factors. The per capita disposable income of the rural residents was 3,880 yuan, up by 7.2 percent in real terms.

The per capita income of the urban residents was 2.57 times of that of the rural residents, 0.02 less than the same period last year. The median of the national per capita disposable income was 6,067 yuan, a nominal increase of 6.7 percent.

The per capita expenditure nationwide was 4,796 yuan, a nominal increase of 7.7%, or 6.2% after deducting price factors.

By the end of February, the number of rural migrant workers was 172.53 million, which was 4.54 million more than the same period last year, or up by 2.7 percent. The monthly income of migrant workers was 3,482 yuan, a year-on-year increase of 6.4 percent.

Some economists think official Chinese economic data understates performance using data on satellite-recorded nighttime lights as an independent benchmark for comparing various published indicators of the state of the Chinese economy.

“Alibaba economy” to generate about 30% of all jobs in 2035

By 2025, China’s investment in tourism will amount to US$278.7 billion, taking over the US as the world’s largest tourism country according to WTTC. In the following 10 years, the growth rate of the tourism industry will continue higher growth than the macro-economy. The tourism industry is expected to offer 72.9 million new jobs.

Although China’s economic growth slows down, China in the global tourism market gains an increasingly larger share. According to data of the World Travel and Tourism Council, annual growth rate of China tourism GDP a is 3.8%, slightly lower than the previous year’s estimation of 4.1%. Many factors can explain why China will be difficult to maintain high growth rates, including the gradual loss of the demographic dividend, decline of return on investment (ROI) year by year, unfavorable external environment, slowing productivity growth , transformation of the economic structure and others.

By 2025, China’s investment in tourism will reach US$278.7 billion, taking over the US as the world’s largest tourism country. However, the total tourism GDP contribution, inbound and outbound tourism consumption rank after the United States. The contribution of the tourism industry in China’s GDP will increase from 9.8% 2014 to 10.5% 2025 and tourism employment in the total employment rises from 9.4% 2014 to 10.7% 2015, mainly due to strong growth demand in the emerging market and a growing consumption trend in tourism, in addition, the support of the government and the companies to meet the large demand of tourism infrastructure and talents.

By 2025, China will surpass Spain and France to be the second largest country by tourism revenue, following the U.S., and the largest tourism spending country, followed by America, German and the United States.

Also read: China the Largest Inbound Tourism Market for Japan H1 2015

The total number of China’s tourists is estimated to exceed 4.1 billion person trips in 2015, and reach a total revenue of 3840 trillion yuan (US$617.40 billion), according to China Tourism Academy.

In Q1 2015, the total transaction value of China online vacation travel market reached 11.06 billion yuan (US$1.80 billion), an increase of 59.8% year-on-year and 21.7% QoQ; and the total transactions of China online travel market reached 94.76 billion yuan (US$15.28 billion) in Q1 2015, an increase of 51.3% YoY and 9.4% QoQ.

In the first half of 2015, online travel business contributed a lot in China’s travel market, and many big online travel operators received investment from enterprises domestic and abroad. Jingdong invests US$500 million funds in Tuniu; Ctrip, after acquired eLong, received US$250 million investment from Priceline, which was the largest international online travel company. And, Lvmama received 500 million yuan (US$80.39 million) strategic investment from Jin Jiang International Holdings Limited Company.

The outbound tourism also maintained a steady growth in H1 2015. The total number of outbound and inbound tourism reached 127 million, with an increase of 9.8% year over year and the number of outbound tourists reached 61.9 million visitors. Japan, the United States and some European countries were hot travel places. Most people would book tickets or flights through mobile apps. Read more about China’s tourists travel intention in 2015 here.

Under the proactive fiscal policy and relatively easy monetary conditions, tourism consumption and industrial investment would have further promotion. Travel agencies, online travel companies, and other areas of the field would have more room for development. Besides, with the penetration of China mobile travel apps and Chinese citizens’ trend to travel, 2015 is forecasted to be a fruitful year for tourism industry.

Also read: Baidu Revenues Reached US$2.67B in Q2 2015

In May 2015, CTR, a Chinese reserach company, announced a new report on China advertising market, which focused on key industries and top advertising marketing companies.

In early 2015, advertisers had more confidence in their industries and companies compared with last year.

The total budget increase in 2015 came the lowest since 2009, and the reduction rate was 29%, which was the highest in recent 7 years. Companies had less expectation for the future market.

Most advertisers popularized products through multi-channel marketing and agreed that building a good brand image is essential for marketing. In 2015, it gradually became a trend for companies to buy direct advertisements from media, and invest more in digital marketing.

In 2015, TV, internet and end promotion would become major marketing tools. Second-tier and third-tier cities, east China, Central China and South China would be key marketing areas; the first-tier cities and northwestern China would cut marketing expenditures, according to CTR.

In recent 2 years, advertising tools increased, more advertisers would choose to use multimedia, especially mobile internet and events marketing.

Provincial TV sites would be first choices for most advertisers, while CCTV sites had less advertising than last year, digital TV advertising has been increasing for 3 successive years.

2015 would see a year of large input in social media, video and search engineer advertising, both in PC internet and mobile internet. New outdoor media, such as cinema advertising and bus advertising would attract more advertisers.

While investing in advertisements in internet terminal, it is always not easy to judge their effectiveness, advertisers must consider all concerned factors before making decisions. More and more advertisers tend to popularize products through several multimedia combination, and like to help build brand image through TV, outdoors and prints. They get a clear view towards each promotion channel, the interactivity of internet, low cost of the radio advertising, which helps them choose a better advertising channel.

Also read: China Online Advertising Market in Q1 2015

In January 2015, eastmoney.com had daily user  coverage of 14.85 million, ranking top among China’s financial websites by total reach, followed by ce.cn and hexun.com according to data from iResearch.

In terms of browsing time, eastmoney.com ranked top with 94.85 million browsing hours, followed by 10jqka.com and Yicai.com in Jan 2015 in China.

Also read: China Fast-Growing Internet Investment Product Insights in 2014

According to National Bureau of Statistics of China, GDP of China was 63,646.3 billion yuan (USD 10,239.9 billion) in 2014, an increase of 7.4% at comparable prices.

The year-on-year GDP growth of the first quarter in 2014 was 7.4%, the second quarter 7.5%, the third quarter 7.3%, and the fourth quarter 7.3%. The gross domestic product of the fourth quarter of 2014 went up by 1.5% quarter-on-quarter.

Agricultural Production

China’s total grain output in 2014 was 607.10 million tons, an increase of 5.16 million tons, up by 0.9%.

• Summer grain: 136.60 million tons, an increase of 3.6%
• Early rice: 34.01 million tons, a decrease of 0.4%
• Autumn grain: 436.49 million tons, an increase of 0.1%
• Cereals: 557.27 million tons, an increase of 0.8%
• Cotton: 6.16 million tons, a decrease of 2.2%
• Pork, beef, mutton and poultry: 85.40 million tons, an increase of 2.0%
• Poultry eggs: 28.94 million tons, an increase of 0.6%
• Milk: 37.25 million tons, an increase of 5.5%

Industrial Production

The total value added of the industrial enterprises above designated size in 2014 was up by 8.3% at comparable prices.

An analysis by types of ownership showed that the value added growth of:

• the state-owned and state holding enterprises: 4.9%;
• collective enterprises: 1.7%;
• share-holding enterprises: 9.7 percent;
• enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan: 6.3%

Out of the 464 kinds of industrial products, the output of 329 kinds realized an increase compared with last year. In 2014, the sales-output ratio of industrial enterprises above designated size reached 97.8%. The export delivery value of these enterprises reached 12,093.3 billion yuan, up by 6.4%.

In December, the total value added of the industrial enterprises above designated size was up by 7.9% year-on-year or up by 0.75% month-on-month.

Investment in Fixed Assets

In 2014, the investment in fixed assets (excluding rural households) in China was 50,200.5 billion yuan, the nominal year-on-year growth of 15.7% over last year (a real growth of 15.1% after deducting price factors).

• The investment by the state-owned and state holding enterprises: 16,162.9 billion yuan, a rise of 13.0%
• Private investment: 32,157.6 billion yuan, up by 18.1%, accounting for 64.1% of the total investment

The growth in eastern, central and western regions was 14.6%, 17.2% and 17.5% respectively.

The total investment in real estate development in 2014 was 9,503.6 billion yuan, a nominal growth of 10.5% (a real growth of 9.9% after deducting price factors). In particular, the investment in residential buildings went up by 9.2%.

China Retail Market

In 2014, China’s total retail sales of consumer goods reached 26,239.4 billion yuan, a nominal annual rise of 12.0% (a real growth of 10.9 percent after deducting price factors).

The retail sales in urban areas reached 22,636.8 billion yuan, up by 11.8%; and the retail sales in rural areas stood at 3,602.7 billion yuan, up by 12.9%.

The income of catering industry was 2,786.0 billion yuan, up by 9.7%; and the retail sales of goods were 23,453.4 billion yuan, up by 12.2%.

In December, the nominal growth of total retail sales of consumer goods was 11.9% over last year (a real growth of 11.5% after deducting price factors), or 1.01% month-on-month.

In 2014, the online retail sales reached 2,789.8 billion yuan, an increase of 49.7% compared with last year and the online retail sales of the enterprises (units) above designated size stood at 440.0 billion yuan, up by 56.2%.

Imports and Exports: Slowed Down

The total value of imports and exports in 2014 was 26,433.5 billion yuan, an increase of 2.3%. The total value of exports was 14,391.2 billion yuan, up by 4.9%; the total value of imports was 12,042.3 billion yuan, a decrease of 0.6%. The trade balance was 2,348.9 billion yuan in surplus.

In December, the total value of imports and exports was 2,490.1 billion yuan, the year-on-year growth of 4.2%. Of this total, the value of exports was 1,397.3 billion yuan, up by 9.9%; and that of imports was 1,092.8 billion yuan, down by 2.3%.

Consumer Price: Increased at a Low Rate

In 2014, the consumer price went up by 2.0% in China. The price went up by 2.1% in urban areas and 1.8% in rural areas.

• Prices for food rose by 3.1%
• tobacco, liquor and related articles decreased by 0.6%
• clothing up by 2.4%;
• household facilities, articles and maintenance services up by 1.2%
• health care and personal articles grew by 1.3%
• transportation and communication down by 0.1%
• recreation, education, culture articles and services up by 1.9%
• housing up by 2.0%

Grain grew up by 3.1%, oil or fat down by 4.9%, pork down by 4.3%, fresh vegetables down by 1.5%.

In December 2014, the consumer prices went up by 1.5% year-on-year, or 0.3% up month-on-month. In 2014, the producer prices for industrial products went down by 1.9% compared with last year, while the price in December dropped by 3.3% year-on-year and 0.6% month-on-month. The purchasing price for industrial producers was down by 2.2% compared with last year and in December, the price was down by 4.0% year-on-year and 0.8% month-on-month.

Residents’ Income: Continued to Increase

Based on the integrated household survey, the national per capita disposable income was 20,167 yuan in 2014, a nominal growth of 10.1% or a real increase of 8.0% after deducting price factors.

In terms of permanent residence, the per capita disposable income of urban households was 28,844 yuan, a nominal growth of 9.0%, or a real growth of 6.8% after deducting price factors.

The per capita disposable income of rural residents was 10,489 yuan, up by 11.2% nominally, or 9.2% in real terms. The median of the national disposal income was 17,570 yuan, a nominal increase of 12.4%.

Taking the per capita disposable income of nationwide households by income quintiles, that of the low-income group reached 4,747 yuan, the lower-middle-income group 10,887 yuan, the middle-income group 17,631 yuan, the upper-middle-income group 26,937 yuan, and the high-income group 50,968 yuan.

The Gini Coefficient for national disposable income in 2014 was 0.469. The per capita net income of rural residents was 9,892 yuan, an increase of 9.2% after deducting the price factors. The number of rural migrant workers at the end of the year was 273.95 million, which was 5.01 million more than that in the previous year, or up by 1.9%. Specifically, the numbers of local and outside workers were 105.74 million and 168.21 million respectively, up by 2.8 and 1.3%. The average monthly income of migrant workers was 2,864 yuan, up by 9.8%.

Industrial Structural: Stable Progress

The industrial structure was further optimized. In 2014, the value of the tertiary industry accounted for 48.2% of GDP, 1.3 percentage points higher than last year, 5.6 percentage points higher than that of the secondary industry.

The structure of domestic demand was further improved. In 2014, the final consumption expenditure accounted for 51.2% of GDP in China, 3.0 percentage points higher than last year.

The income gap between urban and rural households was further narrowed. In 2014, the real growth of the per capita disposable income of rural households was 2.4 percentage points faster than that of urban households. The per capita income of urban households was 2.75 times of the rural households, 0.06 less than last year.

In 2014, the energy consumption per unit of GDP decreased by 4.8% compared with last year.

Money Supply

By the end of December 2014, the balance of broad money (M2) was 122.84 trillion yuan, an increase of 12.2% compared with that at the end of last year; the balance of narrow money (M1) was 34.81 trillion yuan, up by 3.2%; and the balance of cash in circulation (M0) was 6.03 trillion yuan, a rise of 2.9%.

At the end of December, the amount of outstanding loans was 81.68 trillion yuan, while the amount of outstanding deposits was 113.86 trillion yuan. In 2014, the newly increased loans reached 9.78 trillion yuan, an increase of 890.0 billion yuan; the newly increased deposits were 9.48 trillion yuan, or 3.08 trillion yuan less than last year. The social financing reached 16.46 trillion yuan, a decrease of 859.8 billion yuan.

Population and Employment

By the end of 2014, the total population of mainland China was 1,367.82 million (including population of 31 provinces, autonomous regions and municipalities, and servicemen in CPLA; but excluding residents in Hong Kong SAR, Macao SAR, Taiwan Province and overseas Chinese), an increase of 7.10 million over that at the end of 2013.

In 2014, the number of births was 16.87 million and the birth rate was 12.37 in a thousand; the number of deaths were 9.77 million with a death rate of 7.16 in a thousand; the natural growth rate was 5.21 in a thousand, an increase of 0.29 in a thousand.

In terms of gender, the male population was 700.79 million, and female population was 667.03 million; the sex ratio of total population was 105.06 (the female is 100, male to female); the sex ratio at birth was 115.88.

Population at the working age of 16-59 was 915.83 million, a decrease of 3.71 million as compared that at the end of 2013, and it accounted for 67.0% of the total population; population aged 60 and over was 212.42 million, which was 15.5% of the total population; population aged 65 and over was 137.55 million, accounting for 10.1% of the total population.

In terms of urban-rural structure, the urban population was 749.16 million, an increase of 18.05 million over the previous year; and the rural population was 618.66 million, a decrease of 10.95 million. The proportion of urban population to total population was 54.77%.

The population who reside in street communities but with permanent household registration elsewhere and having been away from that place for more than 6 months reached 298 million, which was 9.44 million more than that in the previous year. The migrant population was 253 million, or 8.00 million more. At the end of the year, the total number of employed persons was 772.53 million, or 2.76 million more than that at the end of 2013; the number of urban employed persons was 393.10 million, or 10.70 million more.

Read more: WeChat Li Cai Tong Fund Reached 100 Bln in the First Year

My first enterprise in China back in 2009 was a social community website for fashion-oriented, affluent Chinese. Together with three partners, one of which was a Chinese, we had developed the concept and launched a first version of the website.

These were the days of Kaixin and Renren but we felt we had a chance to start something unique and new in a clearly defined niche. China seemed the ideal place for this adventure: the Chinese middle class was emerging (these were the days when the Sanlitun Village was just becoming the new Mecca for this crowd), programmers were cheap, and venture capital firms were eager to invest in promising start-ups. In short, it was the new Eldorado for internet entrepreneurs – or so it seemed.

One and a half years later, we closed shop. The Chinese competition had proved to be formidable on their home turf. In spite of the fact that we had been onto a nice concept for a social community (think Pinterest for China), we had failed to attract critical user numbers. And a second round of investment we badly needed to boost our growth never materialized.

After three years of bootstrapping and an angel investment, we simply ran out of the means to sustain ourselves and to constantly add new features to the site (a necessity to remain competitive). We had spent three wonderful years pursuing our dream but now it was clearly time to wake up and move on.

This is, of course, easier said than done. Besides the psychological challenge of having to overcome “defeat,” my three partners and I were facing very real issues: how are you going to pay your rent? What about these open student loans that need to still be paid? What about China – is it still the right place to be?

Luckily, I had placed my bets on the right people: with one exception, our core team remained intact and we decided that we wanted to continue working together. I can’t stress enough how important it is to find the right people (and retain them) when starting your own business. After the quality of your actual business idea, it is easily the single most important factor as regards success and failure. Moreover, I was blessed with a great network of likeminded entrepreneurs and had two business coaches who helped me tremendously.

Then there was the question what kind of new business to start. After our grandiose idea had failed, we all were in the mood for something more ordinary but stable. So we decided to make use of the resources and connections we still had and to open a web agency in Beijing and Hamburg, Germany. To be sure, this was a different business altogether: first of all we needed to find clients.

Fortunately, there was (and still is) a considerable demand for quality web design and development in China. And as more and more Western companies realized that they needed to establish a web presence in China, there was also a growing demand for our services in Europe. More recently, there has been a surge in requests for mobile applications, SEO and social media marketing. To be sure, demand in China (from both Chinese and Western clients) is not the real problem.

But that doesn’t mean it is easy to run a profitable service business here in China. First of all, you have to ask yourself what core services you can provide and what kind of market you are actually operating in. For instance, it makes a big difference if you are offering web development services or if you specialize in digital strategy.

My recommendation would be to always focus on niche markets that require creativity, a keen sense of taste, and a theoretical foundation. You do not want to compete against an army of cheap labor. Second, you should always try and sell your working methods as much as your actual service. It is very challenging to be a service provider for Chinese clients, unless you find a way to guide your client through the process. You need to find a way to show your Chinese client the added value of approaching a project with a professional, Western methodology and workflow.

At the end of the day, no matter what creative service you are providing, you will need quite a bit of stamina to make it here in China. After four pretty intense years, we are finally able to choose the jobs we want to take on and to decide when to say no.

Today, we run a boutique web agency that does not only provide us with a stable income, but allows us to pursue other business ventures as well. We have managed to carve out a niche but only after we learned some important lessons the hard way. The good thing in China is this: there are plenty of entrepreneurs and professionals who are willing to share their China experiences and to help aspiring entrepreneurs. Do get in touch with these people. It may help you avoid some of the China traps and is certainly time worth spent.

Dr Johannes Kadura is the managing director of digital agency AKRYL, which maintains offices in Beijing and Hamburg. He is also a business coach at The China Expert.

Baidu 100 Index Fund were sold out, RMB 1.8 billion in less than one and half days. The second phase sale of RMB 1.2 billion starts on 27 October on official website of Baidu Financial Center.

Baifa Index using Baidu financial search and user behavior of large data for the first time, by the corresponding data mining and analysis means, will involve specific financial entity data automatic analysis, merge, statistics and calculation, and the introduction of quantitative investment model, the preparation of the stock market index.

Baifa 100 Index is the first product of Baifa Index, an internet index of cooperation between China Securities Index Co. and Baidu Inc., GF Fund management Co., Ltd. This year Baifu 100 Index rose up by 51.25%, far outperforming the broader market and traditional indices.

Compared with the mainstream of the market index, Baifa 100 Index has achieved outstanding performance since its release with 545% return since 2009 according to Baidu, far higher than the same period in Shanghai and Shenzhen 300 (19%), and Shang Stock Exhange Composite Index (12%).