No significant improvement in the external environment
The resonance of the global economic recovery in 2019 is coming to an end, and the global growth rate is expected to fall to 3.7%. Among them, the Fed s interest rate hikes, a sharp increase in fiscal deficits, and intensified trade protections will cause the US economy to slow down. Fiscal problems in countries such as Brexit and Italy may slow European economic growth. Emerging economies are suffering from domestic economic difficulties Passively following the Fed s interest rate hikes to stabilize the exchange rate and curb inflation , the international crude oil price has changed from a sharp rise to a decline, leaving commodity exporters directly facing economic and financial difficulties. The external demand facing the Chinese economy will continue to fall, and export growth will face greater pressure.
The deeper adverse impact of the Sino-US trade war on China s non-trade channels in 2019 will begin to appear. The international division of labor pattern is being restructured. The decoupling between central and peripheral countries is becoming more and more obvious, which may put China at a disadvantage in the global value chain. At the same time, the increase of barriers such as technology and investment will also hinder the spread of new technologies, leading to Productivity drops. With the gradual emergence of the impact of the Sino-US Trade war, the impact on economic expectations and market confidence has increased. The turbulence and normalization of China s macroeconomic external environment means that China s macroeconomic operation has entered a new stage, and China s opening strategy and its model must be adjusted.
Coordinating steady growth and prevention of risks
During the critical period of China s economic structural transformation and the cumulative release period of deep-seated problems, there are still a large number of institutional obstacles to the conduction of China s macroeconomic boom. It is difficult for market-based endogenous growth drivers to rebound quickly in the short term, and market forces replace It will take some time for policy forces to become the core of China s stable macroeconomic growth. At the same time, China s economic policy regulation space with active industrial policy as the core, expansionary fiscal policy, and prudent monetary policy as tools has been strongly constrained by debt burdens, financial risks, and industrial space, and it is difficult to maintain traditional stimulus. Policies The power of sexual recovery has reached its extreme, and the debt-investment-driven model is unsustainable.
In particular, the long-term dependence of China s macro economy on infrastructure investment and real estate investment has severely constrained the economic trends and long-term development of this year and next year, and has also put macroeconomic control policies in a dilemma. The substantial decline in the growth rate of infrastructure investment in the first three quarters of 2018 dragged down the overall investment growth rate by nearly 3 percentage points. However, in the face of the continued decline in investment growth, it is difficult to return to the old path of infrastructure investment because of the current debt burden The overall economic growth model has been abducted, and infrastructure construction will only further increase the risk of local government debt and worsen the efficiency of resource allocation. And to a certain extent, local governments and their financing platforms have no sustainable financial capacity to undertake large-scale infrastructure investmen ts. At present, the growth rate of real estate investment is maintained at about 10%, which is the largest supporting factor for the current overall investment and private investment growth. However, under the current real estate regulation model, the debt risk of real estate companies and the risk of real estate market adjustment have accumulated to a certain extent.
Therefore, although the Political Bureau of the Central Committee clearly proposed to do a good job in the six stability, one of the major challenges to macro-control lies in the interconnectedness between the six stability and the contradiction that is difficult to coordinate, especially how to manage stable growth. Relationship with prevention of risks.
Income distribution and real estate restrict consumption growth
During the critical period of China s economic structural transformation and the cumulative release period of deep-seated issues, deep-seated structural issues such as income distribution and real estate squeeze out, restrict consumption growth and affect final demand from the underlying dynamics. First , the gap in household income distribution has widened, and the growth rate of household disposable income has slowed down. Second, the growth rate of household savings has begun to be lower than the growth rate of loans, and net savings have begun to decline. The major positive changes in income distribution in recent years have been that low-income groups have benefited from the battle against poverty, but support for the disposable consumer funds of the middle and lower income classes has weakened significantly, leading to major changes in consumer behavior patterns.
Specifically, in 2018, the nominal growth rate of consumption for the first time appeared below 10%, and the actual consumption growth after deducting the price factor showed an accelerating downward trend. There is a deep-seated structural reason behind the decline in consumption, which is trendy: first, the growth of disposable income of residents has begun to slower than the growth of GDP, and the slowdown in income growth will definitely affect the growth of residents consumption; The proportion of residents with higher consumption tends to decrease, which deviates from the growth of consumer spending and income growth, further exacerbating the decline in consumption. Third, the growth of household savings has begun to be lower than the growth of loans, and net savings have begun to decline. In 2018, residents net savings balance (deposits minus loans) decreased by about 7% year-on-year. Fourth, residents wealth shrank and their consumption base was weakened.
The continuous differentiation of enterprises affects the driving force of economic recovery
In 2019, the differentiation of different regions, different industries and different types of enterprises will continue to exist and affect the momentum of economic recovery. The divergence in profit of upstream and downstream industries, the divergence in profit of state-owned enterprises and private enterprises and foreign enterprises, has caused the state-owned enterprises balance sheets to be repaired to some extent, but the leverage of private enterprises has risen passively, and the profit growth of foreign enterprises has declined significantly, which may bring about The investment behavior of private and foreign companies has mutated, and eventually led to a decline in overall economic growth and a general decline in corporate profits. And the situation of growth differentiation and adjustment between different regions may also continue.
Conversion of old and new kinetic energy is not complete
The transformation of old and new kinetic energy in China has not ended. The conversion of government-supported new kinetic energy to market-based new kinetic energy has just begun. New kinetic energy is not only difficult to support the foundation of China s macro economy in the short term, but also faces the problem of lack of its own hematopoietic function, and it is difficult for macro investment returns. Get a fundamental reversal in the short term. In the critical period of economic structural transformation, the old structure and old kinetic energy have begun to decline, and the new structure and new kinetic energy have emerged in the promotion of policies, but they have not been completely replaced. At the same time, a large number of innovative projects and high-tech industrial parks have problems that cannot be ignored, such as excessive stimulation and excessive homogenization. There is an urgent need to rectify and clear up some government failures in the process of cultiva ting new kinetic energy, and to pay high attention to the development of some bad debts and bad projects in the process of cultivating new kinetic energy, otherwise the middle of the economic cycle will be formed. Obstacles and obstacles to economic development.
Changes in the behavior of the three major economic entities
Different from the past, more important changes are hidden behind the decline of various macro parameters and changes in market sentiment in 2018. This is the micro-foundation of the Chinese economy and the behavioral patterns of the three major economic entities have changed. The first is that entrepreneurs investment willingness and behavior patterns have begun to change drastically under the squeeze of living space; the second is that consumers debt rates have risen sharply in real estate destocking, and the consumption base has been severely weakened; the third is positive changes in government behavior. The power of local governments as investment engines has been greatly reduced. These changes in the micro-foundation and the change in the behavior patterns of the micro-agents mean that many of the current declines in parameters are not short- term fluctuations, but rather medium-term trends. It is difficult for short-term macro-control policies to change the behavior pattern s of these micro-agents in the short-term.
Specifically, first of all, there have been adverse changes in corporate behavior patterns. First, the rise in production costs and the decline in market demand have led to a continued decline in corporate investment willingness. Second, the profit differentiation of industrial enterprises between industries and ownership has further exacerbated the operating difficulties of manufacturing enterprises and demobilization. Finally, the generalization of investment and real estate of listed companies further highlighted the above problems.
Second, consumer behavior has also changed significantly. Compared with other macro variables, consumption performance is generally relatively stable. New changes this year have caused market attention. The reasons behind it are as follows: First, due to the unhealthy development of the real estate market, residents excessive spending on housing investment has severely squeezed the residents consumption funds. Second, the gap in income distribution among residents has widened, leading to a decline in the proportion of residents with higher marginal consumption propensity. The divergence between the average growth rate of the residents income and the median growth rate, as well as the divergence between the statistical income and real income of various classes, further inhibited the growth of consumption. Third, insufficient supply of high-end and high-end consumption has led to unmet demand for consumption upgrades. Due to the imperfect social security and welfare system in our coun try, the government s insufficient expenditure on public services such as education, old-age care, and medical care has led to excessive preventive savings for residents, which is not conducive to promoting consumer consumption.
Finally, there have been major changes in government behavior. An important factor in the current decline in investment is the sharp decline in infrastructure investment. The core reason is that the government s behavior has changed positively, and the motivation of local governments as investment engines has been greatly weakened. The growth rate of infrastructure investment is lower than the overall investment growth rate for the first time in history, causing the overall investment growth rate to drop by nearly 3 percentage points. A core factor behind this is related to changes in local government investment behavior. The decline in investment, especially in infrastructure investment, is closely related to the adjustment of government behavior, especially local government behavior. Such changes will be the norm in the future. In accordance with the objectives of the reform, the functions of local governments must be restructured, and they must be transformed from a previously regul ated government and investment government to a service-oriented government and a legal government. This change requires the government s investment capacity to be weakened. Another important factor is squeezing water . Under the demand for high-quality development, the new government has undergone substantial changes in investment data. In the past, the proportion of investment in GDP was unrealistically high, and now all aspects of adjustment are being carried out. Local governments cannot raise debts, carry out political performance projects, or add bubbles to the digital bubble. Therefore, for the current decline in investment, we should also see the essence behind the phenomenon.