Li Daokui: some basic judgments on Chinas economy in the second half of the year

 Li Daokui: some basic judgments on Chinas economy in the second half of the year

Author Li Taokui (founding president of China Institute of economic thought and practice, Tsinghua University, columnist of Netease Research Bureau)

Li Daokui

China has gradually found a mechanism that can accurately respond to the epidemic situation and maintain moderate economic growth

In the first half of the year, GDP dropped by 1.6% year-on-year, and the second quarter increased by 3.2%. This data shows that Chinas epidemic prevention has basically changed from the stage of large-scale closure of cities and primary response to the stage of accurate and normalized epidemic prevention. At present, Chinas economic and social operation has returned to the state of relatively medium and high-speed growth.

Chinas economy has found a mechanism that can accurately respond to the epidemic and maintain moderate economic growth. Under this mechanism, we can not only prevent the spread of the epidemic, but also ensure the basic normal operation of social economy. Therefore, in the second half of the year, China may be one of the few economies in the world that can achieve positive growth. As long as there is no recurrence of epidemic in the second half of the year, especially in the Pearl River Delta and Yangtze River Delta, the GDP growth rate this year will probably reach 3% to 4%.

To ensure the employment of college students, the role of labor service companies should be brought into play

In the first half of the year, 5.64 million new urban employees were added, equivalent to 62.7% of the annual target. However, I believe that employment should not only depend on the total number, but also on the structure. The total number of jobs is good, but from a structural point of view, the performance is not good. At present, the new employment is mainly concentrated in the low-end areas, some of the high-quality, high-end, the number of jobs that need college graduates is still insufficient, which leads to the problem of College Students employment. Therefore, we can not think that the annual employment task can be easily completed. If the requirements are raised to ensure a balance between supply and demand in the labor market and ensure that more than 8 million new college students can find jobs, the task is still very arduous. Moreover, the solution to the employment problem of college students can not be anxious, because the economy has not yet fully recovered, high-quality, high-end employment is also difficult to restore to the original level.

In this regard, it is necessary to employ high-end intermediary and high-end labor service companies for college students to provide them with basic security such as social security as a reservoir. Then, the labor service companies will match the relevant enterprises. For the time being, the labor service company will first provide jobs for college students, organize them to go to work, study and train every day, and provide them with a temporary labor service between internship and employment. At the same time, service companies should also keep close contact with relevant employers from all walks of life to gradually find jobs for college students.

The biggest risk of Chinas economy in the second half of the year comes from external shocks

In my opinion, the world economy has not bottomed out yet, because the epidemic is still spreading, and many places may implement the policy of control and isolation again in the autumn. Therefore, the world economy is very difficult. 2020 is basically the most difficult year for the world economy since World War II. In June, the recovery of import and export may still rely on the export of medical and health products, but in the context of the downturn in the world economy, the final demand may still be difficult to improve. In other words, the growth of import and export is unsustainable, and the pressure is still great in the second half of the year.

We must be soberly aware that the biggest risk to Chinas economy in the second half of the year comes from external shocks. At a time when the world economy has not bottomed out, the biggest pressure on Chinas economy is that it is difficult to restore foreign demand. In this case, we need to do something about domestic demand. To some extent, the failure of the world economy to recover is an opportunity for Chinas economy. Because the price of Chinas bulk products, including crude oil, is relatively low, we can take advantage of the current opportunity to appropriately speed up the investment, reserve and construction of relevant sectors.

Real estate industry needs structural force

Service industry and consumption are the focus of economic recovery in the second half of the year

In the first half of the year, the biggest hit was the service industry, so the service industry is a key point for recovery in the second half of the year. To a large extent, the recovery of the service industry plays an important role in whether Chinas economy can turn over and get out of the shadow of the epidemic in the second half of the year.

The focus of service industry recovery is consumer intensive industries, such as tourism, hotels, entertainment, catering. In order to ensure the smooth recovery of the service industry, the prevention and control of the epidemic situation can be further precise. For example, in the future, the real name system of cinemas and mobile apps such as health treasure can be more accurate, so that the problems can be traced back, and the service industry practitioners can conduct regular nucleic acid tests.

As the consumption of the hardest hit areas, it is also the focus of recovery in the second half of the year. The recovery of consumption has the following three points:

3. Restore rigid and improved housing demand. After housing demand recovers, the boom in household appliances and furniture will follow.

Generally speaking, the current liquidity level of Chinas market is sufficient, and the key is to invigorate the financial intermediary services, instead of relying on banks to provide loans to small and medium-sized enterprises. Because of the asymmetric risk, it is very difficult for banks to provide loans to small enterprises. If the small business is not well run and can not repay the loan, the risk of bankruptcy will be transferred to the bank. If the small and medium-sized enterprises are in good condition, the banks will only charge 6% and 7% interest at most. This leads to the problem of asymmetric risk.

Therefore, loans to small and medium-sized enterprises can not only rely on banks. The financial industry must have innovation, mobilize equity financial institutions to provide funds for small and medium-sized enterprises and carry out financial innovation, such as adding some high-risk equity investment institutions into the trust. Globally, QE in other countries outside China, such as Europe and the United States, may still be the keynote. At present, the unstable factors caused by the epidemic situation in foreign countries make the financial market fluctuate. In this context, there may be a new round of quantitative easing.

This article is the exclusive contribution of Netease Research Bureau and does not constitute investment decision.

Produced by Netease Research Bureau (wechat official number: wyyjj163)

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