Securities Times reporter Jiang Dan

  China's gross domestic product (GDP) grew by 4.8% in the first quarter.

Considering that many parts of the country were repeatedly affected by the epidemic in April, and the pressure on economic operation has further increased, how will the economy perform in the second quarter?

How is investment resilience?

What role will foreign trade play in stabilizing growth this year?

Around these issues, a Securities Times reporter interviewed Zhong Zhengsheng, chief economist of Ping An Securities.

  Zhong Zhengsheng said that it is expected that the GDP growth rate in the second quarter will continue to bottom out, and investment will continue to play a supporting and driving role in economic growth.

Considering that in the first quarter, the net export of goods and services contributed to the GDP decline to 0.2%, the lowest since the second quarter of 2020. It is recommended to make a study and judgment on the decline in export growth.

However, Zhong Zhengsheng also mentioned that the second quarter may usher in a bottoming out of the year-on-year growth rate of medium and long-term loans, which will release a positive signal of China's economic stabilization.

  China's economy in the second quarter

  or continue to build

  Securities Times reporter: According to data released by the National Bureau of Statistics, my country's GDP grew by 4.8% year-on-year in the first quarter.

Public opinion is very concerned about whether the economy can be stabilized in the second quarter. What do you think?

  Zhong Zhengsheng: The economy got off to a good start in January and February this year, and the growth momentum weakened in March.

Taken together, the 4.8% year-on-year GDP growth in the first quarter was in line with expectations.

  Based on the median of the annual target growth rate of around 5.5%, the average growth rate in the next three quarters is 5.7%.

We expect that the GDP growth rate in the second quarter will continue to bottom out, which is roughly the same as that in the first quarter, and may fall below "5" for the entire first half of the year.

This means that a faster growth rate in the second half of the year is needed to make up for the gap in the first half.

For the whole year, GDP growth is expected to be about 5.2% year-on-year.

  Securities Times reporter: The current market expectations have weakened. What follow-up measures do you think will stabilize expectations?

  Zhong Zhengsheng: Effective prevention and control of the epidemic is definitely the most important thing to stabilize expectations.

At the same time, despite the current downward pressure on the Chinese economy, there is no need to be too pessimistic.

  First, there is a time lag between the bottom of the credit cycle and the bottom of the economic cycle.

This is reflected in the data that there is a time lag between the stabilization of the growth rate of social financing and the bottoming out of the nominal economic growth rate. From the historical data, the time lag is about half a year.

At present, it is highly probable that the growth rate of social financing in China has bottomed out in October 2021, and it has been half a year.

We are optimistic that the year-on-year growth rate of medium and long-term loans will stabilize in the second quarter. Historically, the stabilization of medium and long-term loans is often a synchronous indicator of China's economic stabilization.

  Second, after two stress tests, China's economy will be more resilient and its policy deployment will be more adjusted.

First, the conflict between Russia and Ukraine allows China to better study and judge the geopolitical pattern, adjust economic and trade relations more targetedly, and integrate into the global economic and financial system more pragmatically; second, the experience of epidemic control in large cities allows China to better balance epidemic prevention and control control and economic growth, and minimize the negative impact of the epidemic on the economy and society.

  Finally, A-shares are currently dominant relative to U.S. stocks, both in terms of absolute valuation and relative valuation.

  Optimistic about the growth rate of manufacturing investment

  stay high

  Securities Times reporter: You have mentioned many times that investment in technological transformation will support the growth rate of investment in manufacturing.

Do you still maintain this judgment?

  Zhong Zhengsheng: We continue to maintain the judgment that investment in technological transformation will support the growth rate of investment in manufacturing.

First, investment in technological transformation is sustainable.

Judging from the experience that the growth rate of manufacturing investment rebounded against the trend from 2017 to 2018, the upward cycle of technological transformation investment is one to two years.

Judging from the two-year average growth rate of manufacturing investment in 2021, this round of technological transformation investment upward cycle may begin in the second half of 2021 and will remain high this year.

  Second, policies promote investment in technological transformation from multiple perspectives.

Since the fourth quarter of last year, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other ministries and commissions have repeatedly issued documents to promote technological transformation and upgrading of enterprises in key areas, involving industries such as steel, nonferrous metals, and building materials.

At the same time, many provinces and cities have arranged special financial funds for industrial transformation and upgrading.

In addition, some provinces and cities, such as Shandong, have specially launched "special loans for technological transformation" to empower the transformation and upgrading of the manufacturing industry.

Manufacturing is the key support direction of credit in recent years.

  Third, manufacturing enterprises also have the driving force for technological transformation.

Manufacturing companies are mainly private enterprises, and they usually weigh costs and benefits before expanding capital expenditures.

In recent years, the cost of upstream raw materials has risen sharply, and some mid- and downstream enterprises may be cautious about new capital expenditures, but there are demands to increase investment in technological transformation to improve the efficiency of energy and other input use.

  Pay attention to quantitative factors

  Contribution to exports turns negative

  Securities Times reporter: Foreign trade maintained double-digit growth in the first quarter, but the contribution of net exports, which had been strong for two consecutive years, declined.

What pressures are foreign trade currently facing?

  Zhong Zhengsheng: In the first quarter of 2022, my country's total exports reached US$820.9 billion, a year-on-year increase of 15.8%. The resilience of China's exports continued to show.

However, from the perspective of the pull of GDP, the pull of net exports to China's economy has declined. The pull of net exports of goods and services to GDP has dropped from 1.1% in the fourth quarter of last year to 0.2% in the first quarter of this year, the lowest since the second quarter of 2020. , China's economic growth is more dependent on domestic demand.

  At present, the pressure of foreign trade mainly comes from many aspects.

First, with the withdrawal of fiscal and monetary stimulus from overseas economies, the demand for durable goods such as home appliances in developed economies represented by the United States has weakened, and the export value of home appliances, audio and video equipment and parts and other real estate related commodities has begun to show negative growth in the post-cycle period. The overall export of mechanical and electrical products formed a significant drag.

Mechanical and electrical products account for a relatively high proportion of my country's exports.

  Second, the intensification of overseas inflationary pressure has weakened the actual purchasing power of consumers, thereby suppressing actual demand. This has also led to the increasing contribution of price factors to my country's exports, and the contribution of quantitative factors to my country's exports may have turned negative.

Among the 17 major export commodities in March, the export volume of 10 commodities decreased, but the export prices of only two commodities fell slightly, and the export prices of 10 commodities increased by more than 20%.

  Third, the outbreak of the epidemic in Shanghai has caused the supply chain in the Yangtze River Delta region to be tense, and some foreign trade enterprises may encounter difficulties in production and delivery.

  Securities Times reporter: In the first quarter, the contribution of net exports of goods and services to GDP fell to 0.2%.

Will foreign trade drag down economic growth this year?

  Zhong Zhengsheng: The direction of China's export growth in 2022 is relatively clear, and it needs to be judged and dealt with in advance.

The period of the fastest economic recovery after the global epidemic has passed, and the growth rate of trade will also decline.

According to the latest forecast released by the IMF in April this year, the global economic growth rate in 2022 will drop from 6.1% in 2021 to 3.6%, of which the developed economies will be as low as 3.3%.

In its summary of economic forecasts released in March, the Fed lowered its GDP growth forecast for 2022 to 2.8% from 4% previously.

This all means that the growth rate of global trade will fall back with the decline of economic growth.

  Recently, ten departments including the State Administration of Taxation issued a document on further increasing the support for export tax rebates, giving targeted support to foreign trade enterprises.

For the judgment of export prospects, it is still necessary to comprehensively consider factors such as the performance of global economic growth, changes in the consumption structure of the United States and other factors, and differences in epidemic prevention and control at home and abroad.