Author: Zhu Yanran
Affected by unexpected factors such as the new crown pneumonia epidemic and the conflict between Russia and Ukraine, the downward pressure on my country's economy has increased significantly in the second quarter.
The National Bureau of Statistics will release macroeconomic data for the second quarter and June of 2022 on July 15, and economic indicators such as GDP growth rate, consumption, investment, and industry will be unveiled.
A number of experts said that due to the worst rebound of the epidemic since the beginning of 2020 and the lockdown measures, economic growth slowed sharply in the second quarter.
Thanks to the improvement of the epidemic, the industrial production data in June may recover significantly, and the decline in consumption will narrow.
The supporting role of investment on the economy was further highlighted, with infrastructure investment maintaining high growth and real estate investment picking up.
The economy is expected to achieve positive growth in the second quarter, and the economic growth rate will pick up significantly in the second half of the year.
Looking forward to the second half of the year, in order to achieve the annual economic growth target, stronger and more precise macro-control measures are needed, and the policy effects will be more fully reflected.
Experts suggest that fiscal policy should focus on final demand and favor industries that have been hit hard by the epidemic.
Monetary policy will continue to give full play to the advantages of aggregate and structural tools, fully tap the potential of interest rate reform, and guide financial institutions to increase support for key areas such as inclusive small and micro enterprises, green development, manufacturing, and infrastructure.
GDP is expected to grow positively in the second quarter
According to the latest chief survey results of Yicai, the average forecast of the GDP growth rate in the second quarter of 2022 by the 17 economists participating in the survey is 0.94%, which is far lower than the economic growth rate of 4.8% in the first quarter of 2022.
According to a research report released by Guojun Macro, the epidemic has caused a greater impact, and the growth rate is expected to be 0.8% in the second quarter.
From the perspective of the supply side, the impact of the epidemic on the industry and the service industry is relatively large. The industrial added value in the second quarter is likely to fall below 1%, and the service industry production index is still in the negative growth range. Therefore, the second quarter GDP is likely to be below 1%. larger.
On the demand side, consumption is weak, infrastructure and manufacturing drive investment, and exports are more resilient.
The Chinese economy will face unprecedented challenges in 2022.
Wang Jun, director of the China Chief Economist Forum, told China Business News that from an international perspective, the new crown epidemic and the conflict between Russia and Ukraine continue to disrupt the pace of economic recovery, and domestic triple pressures have a continuous impact on the economy.
With the strong support of the bottom of the policy, the bottom of the economy in 2022 may have appeared in the second quarter, and continue to show a clear recovery in the third quarter.
But we also need to be soberly aware that, given the sharp stagnation in both supply and demand in April and May, the rebound in June may just barely bring the economy out of negative growth in the second quarter.
Lou Jiwei, President of the China Society for Finance and Vice Chairman of the China Economic and Social Council, also mentioned in a public speech a few days ago that China's economy has recovered in May and June, but the expected recovery is uneven; Large state-owned enterprises and financial institutions and high-tech enterprises at the high end of the value chain, the middle and lower reaches of the industrial chain and the middle and low end of the value chain are mostly small, medium and micro enterprises and private enterprises. Due to the lack of final demand, the difficulties are the most serious. Only after a full recovery and greatly reduced uncertainty can the economy survive.
With the gradual implementation of the policy of stabilizing growth, economists expect that the disturbance of the epidemic to the economy will gradually weaken, and the economy will recover slowly in the future.
The "China Business News Chief Economist Confidence Index" released by the China Business News Research Institute in July was 50.62, rebounding for two consecutive months, and it was the first time since April this year that it was above the 50 line of prosperity and decline.
Industrial production speeds up repairs
Economists who participated in the chief survey of China Business News forecasted an average year-on-year growth rate of industrial added value in June at 4.07%, higher than the 0.7% announced last month.
Wang Tao, head of Asian economic research and chief China economist at UBS, predicts that the year-on-year growth rate of industrial production may rebound to 3.3% in June, and the three-year average compound growth rate will rise to 5.4% from the previous 4.6%.
From the perspective of leading indicators, the China Manufacturing Purchasing Managers Index (PMI) for June 2022 released by the National Bureau of Statistics on June 30 was 50.2%, an increase of 0.6 percentage points from the previous month, ending the three consecutive months of low operation below 50% , back to the boom range of more than 50%.
Zhang Liqun, a special analyst of the China Federation of Logistics and Purchasing, believes that the PMI index continued to rise in June and returned to above the line of prosperity and decline, indicating that the overall recovery of the economy is more obvious.
It shows that as the impact of the epidemic eases, the abundant growth momentum of China's economy will soon be revealed.
Wen Bin, chief economist of Minsheng Bank, said that the official manufacturing PMI in June rose 0.6 percentage points from the previous month to 50.2%, reflecting that the manufacturing industry has turned to expansion.
The epidemic is under control, logistics recovery has accelerated the process of resumption of work and production, infrastructure investment has rebounded, exports are still resilient, and the decline in the consumption and real estate markets has narrowed, all of which are conducive to the accelerated recovery of industrial production.
High-frequency indicators show that the operating rate of the industry continues to pick up.
In June, the blast furnace operating rate of 247 steel mills across the country rose from 82.8% to 83.4%, the highest level since March 2021; the average weekly operating rate of automobile semi-steel tires in June rose from 56.8% in the previous month to 64.2%.
Consumption declines or narrows
Since the beginning of this year, the central and local governments have continuously introduced relevant measures to promote consumption, and exerted efforts in all aspects and fields to stimulate consumption potential.
According to the survey results of the chief economist of China Business News, the year-on-year growth rate of total retail sales of consumer goods in June may rebound to -0.81%.
Wang Tao said that it is expected that the year-on-year decline in retail sales of consumer goods in June may narrow to 2%, which is still weaker than the growth momentum of industrial activities.
Overall consumer activity may improve due to further easing of epidemic prevention and control measures.
Among them, subway passenger traffic in 18 major cities fell by 14% year-on-year, a significant improvement from the 42% year-on-year decline in May.
Zhang Yu, chief macro analyst at Huachuang Securities Research Institute, analyzed that the recovery of consumption data in June mainly came from automobiles and catering.
It is expected that the growth rate of catering in June will be -8%. Only catering will make the zero growth rate in June 1.4 percentage points higher than that in May.
Although the 618 promotion is generally popular, from the perspective of logistics data, the growth rate of online shopping in June will still be slightly better than that in May.
Thanks to the overweight of the central government's series of auto policies, auto consumption in June exceeded expectations.
According to data released by the China Association of Automobile Manufacturers on the 11th, in June, my country's automobile production and sales completed 2.499 million and 2.502 million respectively, an increase of 28.2% and 23.8% year-on-year.
Among them, the production and sales of new energy vehicles hit a record high, with 590,000 and 596,000 completed respectively, an increase of 1.3 times year-on-year.
The China Automobile Association said that since June, the supply chain of my country's auto industry affected by the epidemic has fully recovered, and companies have accelerated production to make up for losses.
Under the superposition of the national purchase tax halving policy and the local government's policy to promote automobile consumption, my country's automobile market has performed well.
The role of investment support is prominent
Since the beginning of this year, the supporting role of investment in economic development has become more prominent.
The average forecast for the growth rate of fixed asset investment in June by economists who participated in the chief survey of China Business News was 6.08%.
Political commissar Lu, Chief Economist of Industrial Bank, said that in terms of infrastructure, infrastructure investment is expected to maintain steady growth in June, and the remaining special bonds in 2022 will be issued in May and June, and the momentum of capital will be stronger; The transaction area of commercial housing has improved year-on-year, and the financial pressure has eased to support the construction and installation investment of housing companies; in terms of manufacturing, as logistics and production continued to recover in June, investment in the manufacturing industry, which had been slowed down by the impact of the epidemic, is expected to continue to pick up.
In particular, industries such as automobiles and equipment manufacturing industries that have been significantly affected by the epidemic.
This year, under the requirement of stable growth, the issuance of local bonds is pre-emptive. In the first quarter, local bonds were issued early, with a total issuance of more than 1.82 trillion yuan.
After the pace of local bond issuance accelerated in May, according to the requirements of the Ministry of Finance, the annual issuance limit of local special bonds was basically fulfilled in June.
A total of 1,933.5 billion yuan of local government bonds were issued in June, up 143.27% year-on-year and 60.11% month-on-month.
Among them, the new issuance of special bonds was 1,372.3 billion yuan, a year-on-year increase of 218.92%.
In addition, at the executive meeting of the State Council held on June 29, it was determined that 300 billion yuan should be raised through the issuance of financial bonds, using policy-based and developmental financial tools, to supplement the capital of major projects or to bridge the capital of special debt projects.
The central government will provide appropriate discounts.
Cheng Shi, chief economist of ICBC International, said that infrastructure is an important driver of economic growth this year.
Due to the advanced policies, the growth rate of infrastructure construction will likely drop in stages after August, but it is still possible to maintain a certain level of support by issuing new special debt quotas for next year in advance.
Based on existing funding sources, it is expected that the cumulative growth rate of generalized infrastructure construction will reach a high growth rate of 6% to 8% throughout the year.
If the new special debt quota for next year is issued ahead of schedule after August, the growth rate of infrastructure construction may exceed 10%.
Steady growth policy still needs to be strengthened in the second half of the year
This year's government work report has set a full-year expected growth target of around 5.5 percent GDP growth.
This is a medium-to-high-speed growth on a high base, which reflects the initiative and requires hard work to achieve.
Now that 2022 is over halfway through, achieving the annual economic growth target faces even greater challenges.
In the face of the new downward pressure on the economy, stronger and more precise macro-control measures are needed in the second half of the year, and the effect of the policy will be more fully reflected.
In order to ensure the basic completion of the annual economic goals and bring China's economy back to a healthy operating range, China's package of measures to stabilize the economy needs to be expanded and tools innovated.
Wang Jun told China Business News that there is still a lot of room for my country's macro-control, and there is still room for further improvement in policy efforts.
If the expected growth target for the year is not adjusted and the annual growth target of 5.5% is achieved as scheduled, it is necessary to substantially expand macroeconomic policies on the basis of the first half of the year, intensify policy efforts, and strongly break the trend between shrinking demand and weakening expectations. Downward spiral and vicious circle.
Wang Jun suggested that the economic market should be stabilized by focusing on fiscal policy and leveraging the central government, issuing more than 1 trillion yuan of special government bonds for anti-epidemic relief, and establishing a trillion-dollar special fund to promote consumption to the whole country. Specific groups or all people within the scope will issue inclusive cash subsidies or consumer coupons, and issue special debt quotas for 2023 in advance and start using them in the fourth quarter of this year.
Continue to cut RRR and interest rates to reduce financing costs as much as possible and reduce the burden on enterprises.
Wang Tao also believes that it is expected that future policies are expected to continue to increase, including a further rebound in credit growth, relaxation of local government financing platform financing, and further relaxation of real estate policies.
However, the policy support announced so far is still relatively modest, and the still-tight epidemic containment measures may affect the effectiveness of macro easing.
The policy support that has been announced and planned in the future, including the possible issuance of special treasury bonds, is not enough to fully alleviate the downward pressure on the economy.
According to Xu Sitao, chief economist of Deloitte China, policymakers have held several high-level meetings on stabilizing the economy since May amid unexpected economic pressures.
Local governments are speeding up the implementation of tax rebates, tax reductions and fee reductions, and deferral of social security premiums and other relief policies to help enterprises, and measures to boost the economy, such as easing restrictions on house and car purchases, are also being implemented gradually.
This kind of precise force is consistent with the official tone of not engaging in "flooding irrigation"-style strong stimulation.
Xu Sitao said that fiscal policy should focus on final demand and favor industries that have been severely hit by the new crown. For example, the Ministry of Finance said that it will increase support for the development of enterprises in civil aviation and other industries.
It is wise to introduce incremental fiscal policies. Whether the economic market can be effectively stabilized will ultimately depend on the efficient coordination of epidemic prevention and control and resumption of work and production.