(Economic Observation) Is China's economic recovery sufficient behind the data decline?
China News Service, Beijing, June 16 (Reporter Wang Enbo) Variant viruses spread around the world, domestic epidemics occurred sporadically, and commodity prices rose... The past May brought challenges to the Chinese economy, which has been in the process of steady recovery.
The National Bureau of Statistics of China announced on the 16th that the growth rate of a number of major economic indicators continued to decline that month.
This can't help but worry: Is China's economic recovery sufficient?
According to official information, the growth rate of China's main production demand indicators slowed down in May.
In the same month, the value added of the national industrial enterprises above designated size increased by 8.8% year-on-year, and in April it was 9.8%; in May, the total retail sales of consumer goods increased by 12.4% year-on-year, and in April it was 17.7%; from January to May, the national fixed asset investment increased by 15.4% year-on-year , 19.9% from January to April.
Regarding the reasons for the weak data, Wen Bin, chief researcher of China Minsheng Bank, analyzed that due to the impact of the new crown pneumonia epidemic, China’s main economic indicators began to experience a significant negative growth in February last year, leading to a sharp jump in the year-on-year growth rate of related indicators in February this year. The base number rebounded last year, and the year-on-year growth rate of related indicators is also an inevitable trend. Therefore, only looking at the year-on-year indicators has a large interference. It is necessary to eliminate the base effect and analyze the economic recovery from multiple angles.
As he said, from a month-on-month comparison that better reflects recent changes, various indicators remain basically stable; from the two-year average growth rate, most production demand indicators have accelerated.
For example, in May, the two-year average growth rate of the industrial value-added of industries above designated size and the service industry production index was 6.6%, which was 0.4 percentage points higher than the previous month.
From January to May, the two-year average growth of investment in fixed assets was 4.2%, 0.3 percentage points faster than that from January to April.
The total retail sales of consumer goods in May grew by an average of 4.5% in two years, 0.2 percentage points faster than the previous month.
Wen Bin believes that in May, the month-on-month growth of production and demand remained basically stable, and the two-year average growth rate of investment and consumption both accelerated from the previous value, indicating that China's economy as a whole continued to stabilize and recover, which is basically in line with expectations.
The increase in market vitality has also added a powerful footnote to the continued economic recovery.
According to a survey of Chinese entrepreneurs recently released by UBS Evidence Lab, the proportion of companies surveyed negatively affected by the epidemic has dropped from 79% in September last year to the current 48%.
The business expectations of the surveyed companies also continue to improve, of which 66% expect their sales revenue to increase in the second half of this year.
The momentum of China's economic recovery continues, but the challenges it faces cannot be ignored.
The recent rapid rise in international commodity prices has driven China's PPI (National Industrial Producers' Ex-factory Price) to a high year-on-year increase. Whether this pressure will be transmitted to the CPI (Consumer Price Index) will cause market concern.
Guo Liyan, a researcher at the Decision Consultation Department of the Chinese Academy of Macroeconomics, told a reporter from the China News Agency that the consideration of inflation generally starts with terminal consumer prices. According to the current moderate fluctuations in the CPI, there is no need to worry too much about inflation.
She said that at present, the supply of important livelihood commodities such as meat, poultry, eggs and milk is abundant, and the price movement is steady and downward. Food prices have become the "stabilizer" of the CPI.
It is expected that the CPI will continue to fluctuate moderately within a reasonable range in the second half of the year.
Regarding the prices of industrial products, in order to promote the smooth operation of the bulk commodity market, officials have successively made moves.
It is understood that in accordance with the deployment of the executive meeting of the State Council, the relevant departments of the State Council will continue to strengthen the two-way adjustment of market supply and demand, strengthen the joint supervision of the bulk commodity futures and spot markets, "zero tolerance" for speculation and speculation, promptly investigate abnormal transactions, and severely investigate and punish violations of laws and regulations. Guide the price of bulk commodities to return to the fundamentals of supply and demand, and create a good price environment for the stable operation of the economy.
After May, the "progress bar" in 2021 has been nearly half.
On the basis of a stable recovery in the first half of the year, how will China's economy go in the second half of the year?
Chen Xing, chief macro analyst at Zhongtai Securities, is optimistic that consumption will continue to rebound.
He said that based on the two-year average annual growth rate, in the first quarter, the per capita disposable income of Chinese residents reached 7% year-on-year, which was quite close to the growth rate of around 8% to 9% before the epidemic. The difference has also converged, coupled with the acceleration of vaccination, China's consumption may usher in a significant improvement in the second half of the year.
Wen Bin reminded that there are still many factors of imbalance and incoordination to see the global economic recovery. Inflation in the United States has accelerated, but the new non-agricultural employment has fallen short of expectations. There are big differences in policy orientation, and we must be alert to the risks caused by the unexpected adjustment of the Fed's monetary policy.
He believes that because China’s economy has not yet fully recovered, and the foundation for recovery in some areas is not solid, for example, the small business PMI index has been volatile and has fallen to a contraction range again recently. Therefore, macroeconomic policies should continue to be "stabilized" and still need to be vigorously improved. Stimulate domestic demand and increase structural support for key areas and weak links. (Finish)