What is the macroeconomic policy for the second half of next weeks China Economic Semi-annual Report?

 What is the macroeconomic policy for the second half of next weeks China Economic Semi-annual Report?

Li Keqiang, Premier of the State Council, attended the Summer Davos Forum on July 2, 2019, and said that in the first half of this year, Chinas economy was generally stable and operating in a reasonable range, and its economic fundamentals continued to maintain a steady and positive trend, with major economic indicators meeting expectations.

Li Keqiang pointed out that, of course, Chinas economy is also facing new downward pressure. We have foreseen and made full preparations for this. China has a huge market, abundant human resources, complete industrial matching, rapid growth of new momentum, sufficient resilience, potential and room for manoeuvre, and the long-term trend towards good will not change.

Survey: GDP grew by about 6.3% in the second quarter

According to the results of the First Chief Economist Survey in July 2019, GDP growth in 2019 is expected to fall to 6.27% from the forecast average of 6.31% at the end of the first quarter. In this survey, 22 economists forecast GDP growth in the second quarter of 2019, with an average forecast of 6.26% and a minimum forecast of 6.1%.

According to the leading indicators, the purchasing manager index (PMI) of Chinas manufacturing industry was 49.4% in June. From January to June, the average PMI of manufacturing industry was 49.7%, which was lower than 1.6 percentage points in the same period last year.

On the demand side, the new order index averaged 50.4% in the first half, down from 2.4% in the same period last year. On the supply side, the average production index is 51.4%, which is lower than 1.6 percentage points in the same period last year, and the average purchasing volume index is 50%, which is lower than 2.5 percentage points in the same period last year.

From January to May this year, the value-added of industries above the national scale increased by 6% compared with the same period last year, of which, in May, it increased by 5%. Jiang Yuan, a senior statistician in the Industry Department of the National Bureau of Statistics, said that although the gross industrial product was operating in a reasonable range, the growth of industrial exports slowed down due to external factors and market expectations, and the growth of some major industries and products, such as automobiles and mobile phones, slowed down.

Consumption remained stable at a low level in April and May after a slight recovery in the first quarter. In April and May, the total retail sales of social consumer goods grew by 7.2% and 8.6% in nominal terms, respectively, and by 5.1% and 6.4% in real terms.

In terms of investment, the cumulative growth rate of fixed asset investment recovered in the first quarter and then fell in the second quarter. In the first five months, the cumulative growth rate was 5.6% year-on-year, which was 0.3 percentage points lower than that of last year. Private investment in fixed assets continued to decline, with a cumulative increase of 5.3% in the first five months, down 3.4 percentage points from last year.

In terms of import and export, the growth rate of exports and imports slowed down from January to May this year. Among them, imports grew slower than exports, with a trade surplus of $130.47 billion, an increase of $36.11 billion over the same period in 2018.

Wang Jun, chief economist of the Central Plains Bank and member of the Academic Committee of the China International Economic Exchange Center, told First Financial Journalist that he expects the economic operation to continue to decline steadily in the first half of the year and that the three major demands will all decline, but still remain within the reasonable range of expectations set by the central government at the beginning of the year, i.e. between 6% and 6.5%. Among them, the second quarter is expected to be weaker than the first quarter growth of 6.4%, estimated at 6.2%, the first half of the year as a whole is roughly between 6.2% and 6.3%.

A report issued by the National Development Strategy and Research Institute of Renmin University of China predicts that real GDP will grow by 6.3% in the first half of the year and 6.1% in the whole of 2019. The trend of sustained decline in investment growth has eased, with an expected annual growth rate of 6%, while consumption is under pressure in the short term, with an expected growth rate of 8.2%.

According to the report, a relatively stable economic trend can be achieved in the first half of 2019. The two pillars are the start of macro-control policies and the acceleration of the reform and opening-up process. The tight monetary policy stabilized the financial situation. At the same time, driven by the active fiscal policy, local government special bonds made efforts ahead of time and stabilized the investment in infrastructure.

Since the beginning of the year, especially in March and April, various government departments have launched a series of reform measures. These reforms not only have the goal orientation of long-term economic restructuring, but also can effectively enhance aggregate demand in the short term.

Six Stabilities: Still the Focus of Work in the Second Half of the Year

In the past half of 2019, different forms of meetings have been held intensively from the central ministries and commissions to the local governments in recent years to study the economic situation and deploy the work in the second half of the year. Since June, Gansu, Jilin, Shaanxi, Hunan, Chongqing and other provinces have successively held executive meetings and special meetings of the government, and the main leaders of the party and government are required to pay close attention to investment and projects in person. Against the background of slowing economic growth, steady growth remains a prominent task.

Chen Weidong, Director of the International Finance Research Institute of the Bank of China, said that in the first half of this year, the external environment of Chinas economic development was facing a series of uncertainties. However, under the influence of six stable policies, the economy generally ran smoothly, showing slowing growth, rising inflation and stable employment. Four major characteristics are identified and the balance of payments is enhanced. GDP is expected to grow by about 6.2% in the second quarter. Looking forward to the second half of the year, Sino-US trade frictions are full of variables, and the substantial impact of Sino-US tariffs will continue to emerge. However, the Six Steady policy is expected to accelerate its implementation, coupled with low-base factors, and Chinas economy is expected to stabilize in the third quarter, with annual GDP growth of about 6.4%.

Zhu Baoliang, chief economist of the National Information Center, also believes that in the second half of the year, it is expected that active fiscal policy and sound monetary policy will have a certain effect on stimulating infrastructure investment and stabilizing consumption, and that domestic demand will slowly increase its pulling effect on the economy. Influenced by the slowdown of the world economy and trade frictions between China and the United States, Chinas exports will continue to decline. The recovery of domestic demand will accelerate the growth of imports, and the contribution of net exports to economic growth will decline quarter by quarter. It is estimated that economic growth will be 6.1% in the second quarter, 6.2% in the second half of the year and 6.2% in the whole year.

In accordance with the requirements of the Central Economic Work Conference held at the end of last year, macroeconomic policies should strengthen counter-cyclical adjustment, continue to implement active fiscal policy and sound monetary policy, timely pre-adjust and fine-tune, and stabilize aggregate demand. Active fiscal policies should enhance efficiency, implement larger tax cuts and fee reductions, and substantially increase the size of local government special bonds.

Liu Zhe, Vice President of Wanbo New Economic Research Institute and Director of Business Environment Center, told First Financial Journalist that in the second half of the year, fiscal policy is expected to focus on structural adjustment, focusing more on key areas, introducing structural fiscal policies, such as subsidies and tax incentives for high-end manufacturing industries, and introducing some radical measures. The policy of living rural consumption.

The mid-year report on the analysis and forecast of Chinas macroeconomic situation in 2019 issued by Shanghai University of Finance and Economics shows that it is feasible and necessary to force reform through opening up at the stage when reform enters a deep-water area. Chinas economic development benefits from economic globalization and opening up. In the new era, zero tariffs, zero barriers, zero subsidies, strengthening the protection of intellectual property rights and creating a fair competitive business environment are becoming the goals and priorities of global economic trade and investment under the open system.

Wang Jun stressed that in the future, we should continue to pay less attention to economic growth, pay more attention to improving the quality of economic development and optimizing the structure, and pay more attention to the growth of employment and residentsincome, which is more important for the high-quality development of Chinas economy.