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How To Stabilize Economic Growth In China

2012/4/21 18:14:00 14

ChinaEconomyMacro

8.1%, China's economic growth slowed down 0.8 percentage points in the first quarter compared with the previous quarter.

Has China's economy, which has slowed down for 5 consecutive quarters, has entered a downward path? How to take measures to stabilize economic growth?


8.1% is it too low?


Under the combined influence of multiple factors, China

Economic growth

Falling is not surprising.

Now is the economic growth rate of 8.1% too low?


The first quarter economic growth released the same day's executive meeting of the State Council, the judgement is: Generally speaking, China's economic fundamentals are good, and the economic growth is in a reasonable range.


Employment is often a key indicator when assessing a country's economic growth.

In the first quarter, there were 3 million 320 thousand new jobs in cities and towns nationwide, and the number of rural employment increased by 3.4% over the same period last year, reaching more than 1.6 billion.

Although overall economic growth continued to decline in the first quarter, the main economic indicators such as industrial growth and export growth rebounded significantly in March than in the previous two months. The PMI (Manufacturing Purchasing Managers' index) and other advanced indicators continued to rise for 4 months, adding to people's confidence in China's economy.


In the context of the gradual process of external demand being uncontrollable and consumption boosting, the role of investment in stabilizing economic growth is once again highlighted.

Liu Yuanchun, vice president of School of economics, Renmin University of China believes that the power of steady investment has begun to appear, and its effect on stabilizing economic growth will become increasingly apparent.


Why did the economic growth rate fall?


"The drop in economic growth is the result of multiple factors.

There are both factors contributing to the slowdown in external demand caused by changes in the international environment, as well as the result of early macroeconomic regulation, especially the withdrawal of stimulus policies, and the potential decline in the economy after the pition period.

National Bureau of Statistics spokesman Sheng Lai Yun pointed out.


The external demand continues to slump, and the drag on China's economic growth has become increasingly prominent.

The National Bureau of Statistics estimates that China's net export growth has slowed by about 0.8 percentage points in the first quarter of this year, an increase of 0.3 percentage points over the first quarter of last year.

Since the beginning of this year, the production and consumption of some "blowout" products have been greatly affected.


"Last year, prices were controlled.

Macro-control

First and foremost, the lagging effect of monetary and credit supply has been gradually intensified for a long time, and loans for SMEs are difficult, which is also an important reason for the growth rate to fall.

Zhang Liqun, a researcher with the Ministry of macroeconomic development of the State Council Development Research Center, said.


How to deal with macro policies?


Although the current growth rate of China's economy is in the normal range, despite the obvious rebound in economic indicators in March, we still need to pay high attention to the trend of the 5 consecutive quarters of growth.


"Although the current economic growth rate is still in the normal range, it is necessary to prevent the decline of inertia and build a" bottom "for China's economy in time.

Considering that there is a certain lag in the policy effect, we must take active measures to make it more proactive.

Zhang Liqun believes that we should increase the intensity of policy adjustment.


On the aspect of fiscal policy, the executive meeting of the State Council put forward that we should promptly implement and perfect it.

Structural tax cuts

The policy should expand the scope of business tax and VAT pilot and increase the support for small and micro enterprises. Monetary policy should take into account the promotion of stable and rapid economic development, maintaining price stability and guarding against financial risks, and paying more attention to meeting the needs of the development of the real economy.

Morgan chase, Nomura Securities and other international institutions have recently analyzed that with the policy force and funds in place, the second quarter to the second half of this year, China's economic growth may rebound.

"From the current monthly data, leading indicators and policy trends, China's economy is likely to be in the bottom up process, and growth rate should not continue to decline."

Liu Yuanchun's judgement is more optimistic.

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