Three questions: whether the economic growth policy instruments will be sufficient and not stall next year

 Three questions: whether the economic growth policy instruments will be sufficient and not stall next year

Next year, Chinas economic growth will keep at 6.0%. Cheng Shi, chief economist of ICBC international, expects that the economic growth will show a slow V trend in quarter, and there is a possibility of breaking 6 in single quarter in the second quarter.

It is expected that the growth rate of real GDP will continue to flatten next year, the growth rate of GDP in the first quarter may fall further, and then it will start to stabilize, and the growth rate for the whole year will maintain about 6%. From the perspective of nominal GDP, it is expected that the nominal growth rate of GDP next year will also be higher than this years central level. According to Zhu Jianfang, chief economist of CITIC Securities.

According to Jiang Chao, chief economist of Haitong Securities, Chinas economic growth has the potential to stabilize at the current position of 5% - 6% in terms of the troika. This growth rate is expected to be the bottom of Chinas economy in the medium term, that is, the economic growth rate in the next 5-10 years is expected to remain near this level.

Cheng said that Chinas economic growth will gradually be replaced by quality growth. On the demand side, the welfare of residents will be further optimized. Thanks to large-scale tax reduction and fee reduction, as well as social security policies such as unemployment insurance fund and enrollment expansion of higher vocational colleges, the resistance of residents welfare to the risk of economic downturn has increased, and the dependence of residents Consumption Willingness on economic growth has decreased. On the supply side, total factor productivity will gradually increase, and China Science and technology innovation is showing a curve overtaking trend with the advantage of input-output ratio.

Investment will still play a supporting role

From the perspective of real estate investment, Chen Weidong, President of the Research Institute of the Bank of China, believes that under the circumstances of adhering to the principle of no speculation in housing and comprehensively tightening real estate financing, real estate investment will fall back to a high level next year.

However, in Chengs view, the downward space of real estate investment growth next year is limited. This round of real estate cycle has stepped into a downward channel, and the year-on-year growth rate of land acquisition cost has continued to decline. However, due to the lagging influence of the strategy of high turnover in the early stage of real estate enterprises, a large number of unfinished projects accumulated in the past two years are expected to be transformed into steady growth of construction area and completed area in the next year, and the resilience of construction and installation investment is expected to continue to the end of 2020.

Despite the high fall, real estate investment will remain resilient to a certain extent, which will still support the economy. To promote the steady development of the real estate market next year, Ren Zeping, chief economist and Research Institute of Hengda Group, suggested that, on the one hand, we should prevent currency drain and stimulate asset bubbles. On the other hand, we must prevent excessive tightening and cause major financial risks. The upstream and downstream industry chain driven by real estate is relatively long, so it is necessary to promote the reform to give more play to its real economic function and return to the residential and manufacturing attributes. At the same time of stabilizing land price, house price and expectation, we should use time window to promote housing system reform and long-term mechanism construction.

In addition, Zhu Jianfang believes that the decline in the growth rate of real estate investment can be hedged by a significant rebound in infrastructure investment. From the perspective of the space of infrastructure construction, the future development of urban agglomerations is still promising. The continuous opening of the household registration system, the acceleration of urban agglomerations construction and the further implementation of the strategy of transportation power will continue to provide a stage for infrastructure investment. Planning such as old city reconstruction and 5g network business will also boost the demand for infrastructure investment.

Infrastructure investment in 2020 is still expected to be the focus of financial efforts. With the issuance and use of special bonds and the gradual formation of physical workload, more social funds will be prized, and the growth rate of infrastructure investment is expected to continue to pick up in the future. Chen Weidong said.

Xie Yunliang, chief Macro Analyst of Minsheng securities, predicted that the growth rate of infrastructure investment could reach 7.4% in 2020. The increase of the amount of special debt, the inclination of the proportion of expenditure to infrastructure construction, and the policy stimulus of capital supplement are all favorable factors to boost infrastructure construction. The special debt does not belong to the deficit budget system, so it has a large space.

Sufficient policy tools

Economic development still needs policy support. Chen Weidong said that in 2020, macro policies should adhere to the bottom line thinking, enhance the sense of suffering, and take stable growth as the core of macro-control. Fiscal policy should be more active, and monetary policy should guide the reasonable and moderate growth of monetary credit.

In terms of monetary policy, Zhang Jun, chief economist of Morgan Stanley Huaxin securities, said that Chinas central bank can continue to reduce the MLF interest rate in the future to achieve the transmission of low market interest rate to loan interest rate, and the traditional interest rate reduction is still the option in the future policy operation tool box of the central bank.

Zhu Jianfang predicted that the focus of monetary policy will be from easing the difficulty of financing to easing the high cost of financing. It is expected that the MLF rate will be lowered twice in 2020, the entity financing rate is expected to continue to fall, and the reserve ratio may fall by 100-150 basis points around three grades and two advantages.

In terms of fiscal policy, Zhu Jianfang believes that 2020 will still be reflected in strengthening efforts and improving efficiency. Among them, the focus of efficiency improvement is to promote the special debt as capital and increase the inclination to infrastructure construction; the reinforcement is to increase the general deficit reasonably. He predicted that the fiscal deficit rate will be raised to 3%, and the broad deficit will be appropriately increased, including the increase of local special debt to 3 trillion yuan. At the same time, he will promote the reduction of the proportion of project capital, and further launch innovative policy tools.

Compared with monetary policy and fiscal policy, Ren Zeping believes that fiscal policy is superior to monetary policy in the current macro policy choice. Under the background of the importance of risk prevention and resolution, fiscal policy, as a structural policy, is different from the monetary policy of total amount, which is more conducive to expanding domestic demand, reducing costs and adjusting structure. In addition to the issuance of additional special bonds and the expansion of deficit, tax reduction and fee reduction can also be further optimized, such as reducing social security rates and corporate income tax rates, increasing the proportion of state-owned enterprises assets and profits to be turned in, and avoiding excessive tax growth.