The macroeconomic data in the first half will soon be unveiled, and economic progress might be maintained amid stability. Under the new trend of economic bottoming, accelerated cultivation of new momentums, generally sound employment situation and eased pressure of capital outflow, the space left for “policy mix” of macroeconomic regulation and control is widened.
Though economic downside pressure remains high now, there are also signs of bottoming and it brings greater possibility for macroeconomic regulation and control to balance the relationship among stabilizing growth, adjusting structure and promoting reforms. China's GDP increased by 6.7 percent year-on-year in the first quarter, economic progress might be maintained amid stability in the second quarter and the development momentum in industrial field might beat that of the first quarter. According to collected data, the growth of added value of industries above a designated scale and enterprises’ benefits both gradually pick up. The growth of added value of industrial divisions and major industrial provinces both gradually stabilizes. In the meantime, the year-on-year decline of China’s producer price index (PPI) is narrowed. China’s purchasing managers' index (PMI) has recorded a reading above 50 for the fourth consecutive month, showing that market expectation is improving and enterprises grow more confident. A reading above 50 indicates expansion, while a reading below 50 means contraction. Though the economy is still faced with problems like slow recovery of effective demand, severe overcapacity, obvious polarization and etc., the pressure on stabilizing growth is eased to some extent. The “policy mix” of macroeconomic regulation and control can be thought over deliberately.
Generally sound trend of employment and moderate price hike of commodities create more flexibility for macroeconomic regulation and control. Employment and price of commodities are two key reference indicators for macroeconomic regulation and control. The first half-year saw 7.17 million new jobs created in urban areas, completing 71.7 percent of annual goal and holding steady with that of the same period in last year; China's registered unemployment rate in urban areas stood at 4.05 percent at the end of the second quarter and the surveyed unemployment rate in urban areas of 31 major cities in the first five months of 2016 reached around 5.1 percent, all the figures are relatively low, according to data from the Ministry of Human Resources and Social Security. The job-hunting pressure on college students will intensify in July-August period, but it will bring limited impact to the annual employment trend. The goal for employment might be overfilled. As to the price of commodities, the flood in southern part of China might lead to price hike in the short run or in some parts, but it is not likely to evolve into a rising trend. The price of commodities will see moderate hike throughout the year and the price surge will be maintained at a relatively low level.
It takes time for new development impetus to replace the old one and the new impetus is booming fast, which is able to provide more key points for macro-control. In terms of statistics, during January and May, added value of high-tech manufacturing grew by 9.8 percent year on year, 3.9 percentage points higher than the growth of overall industry. It keeps the trend that growth of added value of high-tech manufacturing is higher than that of overall industry since 2011 and makes increasing contribution to industrial development. It is inevitable for structural adjustment to undergo pains while the economy is under crucial period of overcoming difficulties. So it is urgent to develop new economic growth point. The development and strength of high-tech industry will provide more focuses and key points for macro-control and gradually change the old path of depending on one certain industry.
Uncertainty of foreign environment is still growing but tends to show marginal improvement, which will create more choices for macro-control. The varying pace of recovery in global economy, polarization of monetary policies and Brexit referendum make foreign economic environment more complex. But aftermath of Brexit worsening internal fights of developed economies and postponement in interest rate hike by the U.S. Federal Reserve have changed risk preference of capital and relaxed pressure from capital outflow in a short term, which eases handicap of China’s macro-control policy accordingly.
Expansion in potential for macro-control helps consolidate the good economic momentum and stabilize market expectation. It is noteworthy that since the economy will maintain fluctuating in an “L-shaped” trend in a longer period, macro-control will face problems such as overcapacity, higher enterprises’ debt ratio and risk of asset price bubble and other unpredictable risks. During this period, decision-makers will be faced with various tests. But currently, attention should paid to implementing the key task of de-capacity, de-stock, de-leverage, reducing cost and making up weakness. New economic structure should be developed and new development impetus should be intensified through supply-side structural reform.
Translated By Jennifer & Vanessa
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