Written by Reuters Beijing Chinese Department; Written by Qiao Yanhong
Reuters, Beijing, December 15-Reduced supply constraints and maintained strong exports helped China’s industrial production continue to improve in November; however, due to the recurrence of the new crown epidemic, consumption growth in November fell to the second lowest level of the year. The “zero tolerance” anti-epidemic policy has kept consumption prospects sluggish.
However, investment is the weakest among domestic demand. Real estate investment is the biggest drag. Infrastructure investment has not improved. Only high-tech manufacturing investment is one of the few bright spots. The macro data in November showed that the momentum of economic recovery has further weakened, and the economic growth rate is expected to decline further in the fourth quarter. It is expected to gradually recover next year with the support of loose macroeconomic policy adjustments.
“Constraints on the production side, as related policy adjustments and exports remain relatively strong, industrial production continues to improve,” said Wang Jun, chief economist of Centaline Bank.
He pointed out that the demand contraction is obviously more serious and longer lasting than the supply shock. With the outbreak of a new round of epidemics, the recovery of consumption is once again hindered, but “the weakest part of domestic demand is investment.”
He further stated that, regardless of price factors, the monthly data of overall investment, real estate investment, infrastructure investment, and private investment all showed negative growth compared with the previous month. If the actual investment amount is considered, the degree of decline will be even more drastic from the previous month.
“This shows that the huge deterrent effect of strict real estate regulation and the debt crisis of some real estate companies on the entire industry has not subsided. Private capital is more cautious about future expectations and is generally unwilling to blindly expand investment, while the willingness to deleverage and reduce debt is relatively strong. ,” Wang Jun said.
The National Bureau of Statistics of China announced on Wednesday that the added value of industrial enterprises above designated size in November increased by 3.8% year-on-year, a three-month high, and was higher than the median estimate of 3.6% in a Reuters survey; total retail sales of consumer goods in November increased by 3.9% year-on-year, far below The median estimate in a Reuters survey was 4.6%, which was the second lowest level during the year, with the lowest being 2.5% in August.
Statistics from the Bureau of Statistics also show that investment in fixed assets from January to November increased by 5.2% year-on-year, which was lower than the median estimate of 5.4% in the Reuters survey and the lowest level in the year. Among them, private investment increased by 7.7% year-on-year, infrastructure and manufacturing investment increased by 0.5% and 13.7% respectively, real estate development investment increased by 6%; high-tech industry investment increased by 16.6% year-on-year, of which high-tech manufacturing investment increased by 22.2%.
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“At the moment it is in the third round of economic downturn in the transitional stage, and the economy is under pressure from phased overshoots, and then returns to the consensus range under the’new steady state’,” said Zhao Wei, chief economist of China Securities Securities. At the same time, The process of policy weighing between long-term and short-term goals is also a process of finding a “new steady state.” Real estate companies and other micro-enterprises, financial institutions, and the market also need to experience and gradually adapt to the “new steady state.”
He pointed out that whether it is the lagging manifestation of real estate regulation, the repeated drag on terminal demand by the epidemic, and the impact of environmental protection on production behavior, there is a concentrated response in the short term, especially in winter and spring.
**Economic momentum tends to fall**
In the press release of the Central Economic Work Conference that closed last Friday, there were 25 words “stable”, sending a clear signal of steady growth. The meeting held that the economy is facing the “triple pressure” of shrinking demand, supply shocks, and weakening expectations. It requires that next year’s economic work be “stabilized, progress while maintaining stability, and all regions and departments must shoulder the responsibility of stabilizing the macro economy.” “Policy development The force is appropriately advanced”, and the “counter-cycle” also returns to the field of vision.
“From the statistical data, it also clearly reflects the triple pressure and the downward pressure on the economy,” Fu Linghui, spokesperson for the National Bureau of Statistics, said at a press conference of the State Council Information Office today.
He pointed out that the year-on-year growth rate of social zero dropped from the double-digit growth at the beginning of the year to single digits, which is at a low level. The service industry is also expected to weaken.
From the perspective of supply, the producer price index (PPI) of industrial producers has fallen but is still at a relatively high level. The core shortage of some industries such as automobiles has an obvious impact. Automobile production has also experienced a continuous year-on-year decline, reflecting the impact of supply shocks.
“The momentum of economic recovery is still weakening to a certain extent. Therefore, it is necessary for the Central Economic Work Conference to require that next year’s macro policies be stable, effective and stable,” said Tang Jianwei, chief researcher at the Bank of Communications Financial Research Center.
Zhao Wei believes that the starting point for stable growth in the future may include: accelerated or early launch of major infrastructure projects during the 14th Five-Year Plan period, breakthrough projects in related industries under the “double cycle” chain reinforcement, and “promoting consumption” under common prosperity. policy.
The average growth rate of China’s gross domestic product (GDP) in the first, second, and third quarters of this year was 5%, 5.5%, and 4.9%, respectively, with a significant decline in the third quarter.
The Central Economic Work Conference has outlined a roadmap for stable growth for the market: fiscal advancement, moderately advanced infrastructure investment, continuous tax and fee reduction, and promotion of consumption and expansion of domestic demand. Analysts predict that China’s economic growth rate will be around 5.5% next year, officially opening the “five era”, and the first quarter of next year may be a period of intensive policy development. (Finish)
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