Source: Internet

Tendency: Thorough Economic Adjustment would not occur in China

In terms of the relationship between the monetary policy and economic performance, according to Sheng, China’s general currency in circulation is stable at present, and therefore the monetary policy has not changed yet. It is normal and reasonable that the short-term economy fluctuation would occur due to the influence from the changes of international and domestic environment and policies, and so does the economic statistics fluctuations of March and April that was caused by several complicate factors. We should notice that the statistics fluctuation occurred in April was also partly caused by the factor of base period, without which China’s economic performance has been stable and its economic landscape has not changed yet.

In terms of China’s economic performance, at present, the upward and downturn momentum of China’s economy has remained in deadlocked state, and thus no thorough economic adjustment would occur in China. China’s economy is resilient and full of potential, among which the fundamentals has not changed yet—the industrialization and urbanization are still on their way, the consumption structure is in the key phase of upgrading, and the driving force is in the transition from the old to the new. Those factors of fundamentals determine that China’s economy has the potential and condition for keeping high economic growth. As long as we fulfill the structural transformation as soon as possible by promoting structural reform and advancing new driving force, China’s economy will keep its high growth.

Commodity Prices: Continuity of Picking Up of PPI Remains to be Seen

Since the beginning of this year, the monthly decline of the PPI has slowed in for the fourth straight month. According to Sheng, there’s close relationship among the improvement of the PPI, the advance of the reform of the supply front, and the resulting expectations brought by the former two. The principal task of the reform of the supply front is to reducing the capacity and supply, which would not only guide the market expectation, but may also bring about changes on the supply-demand relationship of some commodities.

According to Sheng, the changes of PPI have been affected by multiple factors, including the stimulations from the futures market and international raw material market, such as the rebound in crude oil prices. In general, however, the situation of the excess of supply over demand has no substantial progress, and the continuity of the picking up of the PPI remains to be seen.

Sheng Laiyun believed that the phenomenon that some enterprises of the industry that should have reduced its production capacity resumed production is worth paying attention to. We should prevent some enterprises from increasing production when the market prices rebounded and thus avoid fluctuations in capacity. At same time, we should also unswervingly push forward the reform of supply front and capacity reduction.

Investment: Intensify Reforms and Promote Private Investment

From the beginning of this year, the growth of the private investment has slowed down. According to Sheng, 50% of the private investment went into manufacturing industry, however, due to the bad market environment of manufacturing industry and the serious situation of excess capacity at present, the private investors has no willing or no place to invest. In the next step, we should intensify reforms, relax control over market entry, and provide private enterprises with more opportunities of financing and project-organizing, and therefore to promote the development of private investment.

According to Sheng Laiyun, the economic growth, investment growth, and export growth are all shifting gears, and the demand structure is also reforming. In the recent two years, the contribution rate of investment to the economic growth was over 50%, and in the Q1 of 2016, the number has reached up to 84.7%. In the future, we should on one hand working hard to maintain stable growth on investment, and on the other hand, we should also pay more attention on releasing consumption potential, conform to the trend and rules of consumption upgrading, intensify reform of supply front, and thus create effective demand.

Real Estate: Contribution Rate of Q1 on GDP Growth Increased

Real estate industry has strong driving effect on other industries, including raw material industries like steel and cement, decoration, and the household appliances. From January to April of 2016, introduced by Sheng, the real estate market has showed the trend of recovery with the increase on market sales, sales amount, the overall real estate price, and the investment on real estate. The recovery of real estate has played a very important role on stable economic growth. The growth of real estate in the Q1 offered higher contribution rate on the GDP growth.

He believes that the growth of China’s real estate industry will maintain its sustainable development. Although China’s real estate industry has already passed the phase of rapid growth, we still have space for urbanization, and therefore the real estate industry still has potential for maintaining stable increase. The regulatory policies of real estate market has not just limited on the means of stimulation, but let the right of regulatory go back market. The market-based measurement would be taken for safeguarding the development of real estate. The real estate market would be healthier after the adjustment.

*This article is an edited and translated version by CCM. The original article comes from Jiemian.com.

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