Stabilize China's economic fundamentals with dual cycles
China News Weekly reporter/He Bin
Published in the 957th issue of China News Weekly on July 7, 2020
Under the haze of the new crown pneumonia epidemic, China's economy finally "turned positive" in the second quarter. On July 16, the National Bureau of Statistics released data on the performance of the national economy in the first half of the year. According to preliminary statistics, the gross domestic product in the first half of this year was 4,566.1 billion yuan, a year-on-year decrease of 1.6% at comparable prices. Compared with the negative growth of 6.8% in the first quarter, the second quarter finally achieved a positive growth of 3.2%.
The specific data are: the value added of the industrial enterprises above designated size decreased from 8.4% in the first quarter to an increase of 4.4%, the value added of the service industry decreased from 5.2% in the first quarter to an increase of 1.9%, and the decline in the total retail sales of consumer goods in the second quarter was narrower than that in the first quarter. 15.1 percentage points, the decline of fixed asset investment in the first half of the year was 13.0 percentage points smaller than that in the first quarter.
Liu Aihua, spokesperson for the National Bureau of Statistics and Director of the General Statistics Department of the National Economy, called the current economic rebound "restorative growth", because from the first half of the year, most indicators are in a trend of improvement or narrowing. However, judging from the cumulative speed in the first half of the year, most of the indicators in the fields of GDP, industry, service industry, investment, and consumption are in a falling range.
"In general, the results of the first half of the year were hard-won, and the current difficulties are reflected in the superposition. That is, short-term shocks are superimposed on long-term structural problems, capacity expansion superimposes the market space is reduced, the basic capacity is insufficient superimposed on the external blockade to increase, innovation bottleneck Superimposed competition has intensified, factor allocation is unreasonable, and institutional constraints are superimposed." Dong Yu, executive vice president of China Development Planning Institute of Tsinghua University, made such an evaluation at the National Forum held by China News Agency that day, but said that "it is far from being achieved. When you can be optimistic".
Dong Yu believes that with the implementation of a series of policies in the first half of the year, it is expected to return to near normal in the second half of the year, but the troika of investment, export, and consumption will all face different problems from the past, which requires macro and micro policies to be more active, flexible and precise. Put it in place, especially the macroeconomic policy should be more substituted into the feelings of the micro-subjects to improve the pertinence and effectiveness of the policy.
As a major strategic layout of China's economy for a period of time in the future, the "double cycle" has been placed high hopes by the political and academic circles. On May 14, the Standing Committee of the Political Bureau of the CPC Central Committee convened a meeting and proposed for the first time "to build a new development pattern that promotes the mutual promotion of domestic and international dual cycles."
In Dong Yu's view, the key to the domestic cycle is to release the strong domestic market potential. Quality must be the core, through improving quality and efficiency, opening up the cycle of domestic market supply and demand, thereby promoting a virtuous cycle of the national economy.
Exporting to domestic sales requires expanding domestic demand
Data show that in the first half of the year, the total value of imports and exports of goods was 14,2377.9 billion yuan, a year-on-year decrease of 3.2%. Among them, the first quarter fell by 6.5% year-on-year, and the second quarter fell by 0.2% year-on-year.
Although a trade surplus of 1,188.9 billion yuan was achieved in the first half of the year, the academic circles are still relatively pessimistic about foreign trade development. Judging from the just announced June China Manufacturing Purchasing Managers Index (PMI), the 50.9% index seems to be good, but the new export order index in June was only 42.6%, import orders 47%, and on-hand orders 44.8%, all lower than There is still a crisis at the 50% line of prosperity.
From the perspective of several major trading provinces that are highly dependent on foreign trade, Guangdong's imports and exports fell by 8.8% in the first five months, of which exports fell by 10% and imports fell by 7.1%. Jiangsu and Zhejiang also experienced significant declines. The negative impact of the epidemic on trade development continues. The higher the dependence on foreign trade, the greater the risk.
On June 22, the General Office of the State Council issued the "Implementation Opinions on Supporting the Transfer of Exported Products to Domestic Sales". While encouraging companies to expand into the international market, they also support marketable export products to open up the domestic market to help foreign trade companies overcome difficulties.
Cui Fan, a professor in the International Trade Department of the School of International Business and Economics of the University of International Business and Economics, and an expert on the Global Value Chain Expert Group of the Economic and Trade Policy Advisory Committee of the Ministry of Commerce, believes that in China’s exports, some products related to epidemic prevention and home office have increased more, but many fields For example, exports of clothing, footwear, and toys are not optimistic. Under this circumstance, it is mainly necessary to protect market players and employment, so that enterprises engaged in trade and production in these areas can tide over the difficulties, and through export to domestic sales, related enterprises can maintain as much as possible, reduce unemployment, and also make these enterprises. Production and export can be resumed after the epidemic has eased.
"In this sense, the internal circulation can play a role in stabilizing the export-oriented economy under the current circumstances, enabling them to resume participating in the external circulation in the future." Cui Fan said.
However, the domestic consumer market is still in a period of recovery. Due to the current consumption recovery is still facing constraints, especially under the conditions of normalized epidemic prevention and control, some concentrated and contact consumer activities are still subject to certain restrictions. Therefore, the current retail sales of goods Food and beverage revenue is still in a trend of resuming growth. In the first half of the year, the total retail sales of consumer goods remained in a falling range, down 11.4% from the same period last year. Under such circumstances, can export to domestic sales have the desired effect?
"Exports to domestic sales still need to be moderate." According to Wang Xiaosong, a researcher at the National Development and Strategy Research Institute of Renmin University of China and a professor at the School of Economics, domestic demand is also limited. The key lies in how to "turn" and how to further develop the domestic market, rather than Back to the closed state.
How to expand domestic demand and make the people more willing to spend money? Wang Xiaosong said that this involves many deep-seated issues of reform, such as establishing a sound social security system, a good medical system, and cultivating more middle-income groups. Only in this way can the cake be enlarged and domestic demand can be effectively expanded, rather than blindly exporting. Turn domestic sales.
Extend the supply chain
Compared with the impact of the epidemic, the changes in the global economic and trade pattern seem to bring greater uncertainty to China's economy in the second half of the year.
Dong Yu analyzed that with the evolution of the international epidemic, possible adverse effects and challenges will further increase. The external demand market may rebound weakly, and countries will allocate industrial chains more based on safety rather than efficiency, thus making the problem of industrial chain supply chain security more prominent. The game from international politics and the influence of geopolitics will pose greater challenges to the Chinese economy. "Moreover, such difficulties and challenges may not last for only half a year. They may continue to affect in the early period of the "14th Five-Year Plan", and may even require a longer period of repair. This makes it possible to analyze the situation and judge trends. Extra complicated."
"The negative growth of China's foreign trade in the first half of the year was mainly affected by the epidemic. Once the epidemic is brought under control, from a data point of view, there is no problem in recovering to a relatively high growth rate." Wang Xiaosong believes that what needs to be more vigilant is the short-term supply chain crisis. . In the past, some of China’s key intermediate products, such as mechanical and electrical products, electronic products, high-tech products, and other parts and components, were mostly supplied from abroad. Once the economic and trade decoupling between China and the United States does occur, or the developed countries unite to block China, China will be global There are risks in the supply chain. "Therefore, one cannot blindly rely on the international market, let alone rely on the supply of foreign intermediate products."
In addition, the suspension of work and production brought about by the global epidemic has also caused the "supply cut" of some industries in China. Take the highly globalized Chinese auto industry as an example. According to customs data, China’s auto parts imports in 2019 were US$36.711 billion, of which more than 80% came from five countries including Germany, Japan, the United States, South Korea, and Mexico. The scale of imported parts reached 10.28 billion US dollars. A recent survey by CCTV Finance shows that, as of now, hundreds of auto makers in 26 countries around the world have suspended operations and production, and China's auto industry may face a supply test in the auto supply chain.
Wang Xiaosong believes that the central government’s goal of dual circulation is to strengthen internal and external balance. Due to the obvious changes in the external environment, the epidemic and international relations have caused the days of domestic dependence on processing trade to be gone. However, in the long run, domestic enterprises may be forced to strengthen independent research and development, strengthen their innovation capabilities, and strengthen the supply of original technologies, thus enabling China’s industrial chain to continue to strengthen, not only realizing the “six guarantees” of the central government. The goal of "the stability of the supply chain of the industrial chain" is more able to achieve the upgrade of the industrial chain.
Eliminate barriers and bottlenecks and smooth internal circulation
In Wang Xiaosong’s view, China currently has a huge domestic market with more and more middle-income people. It can be seen from the stimulating effect of household consumption on the economy that the role of private consumption is becoming more and more obvious. There are gaps, and considerable progress has been made. However, for a long time, it has been overly dependent on external demand and suddenly turned to domestic demand. It is necessary to focus on the domestic cycle, and all walks of life cannot adapt quickly.
“Therefore, the sound development of the internal cycle will take time. Only when consumption, investment, foreign trade, especially exports, have achieved a truly virtuous cycle, can a two-cycle health system be established." Wang Xiaosong said that there are still internal and external An unbalanced situation. China has been accelerating the process of opening up to the outside world, but the market for many products is still relatively closed, and there are still high barriers to the entry of foreign products and elements. Therefore, in order to achieve a smooth internal circulation, the first step is to break these domestic barriers; the second step is to deepen opening up, whether it is products or factors, including investment behavior, we must further strengthen opening up.
Cui Fan also pointed out that there are still some bottlenecks and obstructions in the process of creating a large domestic cycle. The market-oriented allocation of capital, labor, land, technology, data and other factors is still very imperfect, and there are a large amount of stock resources. Is not activated.
"The advantage source of China's international competitiveness is increasingly transformed from cheap labor into a super-large domestic market and domestic demand potential. However, this important source of advantage has not been fully utilized." Cui Fan, for example, said that in the automotive industry, China has The largest consumer group in the world, but the industry concentration is low, the international competitiveness of enterprises is not high, the scale economy of production and the promotion of internal circulation and external circulation have not been fully utilized. "Therefore, under the current circumstances, we should further promote market-oriented reforms, break local protectionism, and promote the optimal allocation of resources under the decisive role of the market to form a more internationally competitive enterprise."
Statistics show that the value-added of industrial enterprises above designated size has maintained positive growth for three consecutive months, the service industry production index has been positive for two consecutive months, the total retail sales of consumer goods have narrowed for four consecutive months, and the export value has been increasing for three consecutive months. From a cross-sectional view, the supply side recovers faster than the demand side.
"Although the supply side is currently faster than the demand side and the producer price index is sluggish, the activation of market demand ultimately requires the advancement of supply-side reforms." Cui Fan told China News Weekly that he actively promoted the market-oriented allocation of factors. Reforms, speeding up the development of the western region, narrowing the regional income gap, and protecting people's livelihood through active employment policies will help activate the domestic cycle. In addition, in the current context, the full implementation of a proactive fiscal policy is also of great significance.
At present, China's epidemic prevention and control system has become increasingly perfect, which can ensure safe production. In the second half of the year, the fourth batch of national-level major foreign investment projects is expected to be launched and implemented. Some reform measures in the capital market and land market will be further implemented and begin to show results. The state may also launch a new batch of pilot free trade zones, and businesses in various regions The environment is expected to continue to improve. "I believe that China's economy is expected to recover further in the second half of the year." Cui Fan said.
China News Weekly, Issue 27, 2020
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