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Liu Yuanchun (President of Shanghai University of Finance and Economics, former Vice President of Renmin University of China, China Macroeconomy Co founder of the Forum (CMF)
60s quick reading:
1、 There is no problem that China's economic growth will reach the target of about 5% this year. The reason is very simple. First, the repair effect is still strong this year, and the light repair effect will gross domestic product Contribute about 2pp growth. The second is the recovery of real estate. Last year, the drag of real estate on the economy may reach 1.2pp, and this year, the drag of real estate may be reduced to 0.2pp. Third, the expansion effect of this year's new term is also very obvious.
2. In January and February this year, the sales of commercial housing in China reached 1544.9 billion yuan, down - 0.1% year on year, significantly narrowing compared with last year (the sales of commercial housing in 2022 was 13.3 trillion yuan, down - 26.7% year on year), and is expected to return to positive growth. The amount of real estate investment rebounded from a 10% year-on-year decline last year to a 5.7% year-on-year decline in January and February this year. Land auction data also rebounded well. More importantly, the price of commercial housing. In February this year, 80% of the new housing prices in cities were increasing month on month, and 60% of the second-hand housing prices in cities began to increase, which was faster than the original judgment.
3. The high-frequency data from January to February this year reflected that the effect of "food, clothing, housing, transportation" recovery was very good, but it also recovered to about 80% in 2019. At the current stage, the first part of economic growth is to reach the normal state in 2019, which is repair, and the future is expansion. This involves further optimization of expectations, further improvement of endogenous momentum, and further repair of the balance sheet. It's actually more difficult when you get to the back.
Body:
First, the characteristics of the current data confirm that—— The economic recovery has started, and the restart effect is very obvious. There are several characteristics:
First, compared with other countries, the social order and economic order brought about by the optimization of China's epidemic policy are repaired very quickly. It was originally estimated that it would take a month and a half to two months for the epidemic to reach its peak and subside, but at present, the process is basically completed in 25 days. Therefore, after the policy was liberalized, the repair of China's economy was faster than that of many developed countries and East Asian countries. Why should we be quick? This may be studied in the future. However, the epidemic came and went quickly, which led to the rapid restoration of social order. Therefore, the rapid rebound of various parameters is also expected.
Second, the supply side repairs faster than the demand side, This is not only reflected in the obvious rebound of various parameters on the supply side, but also more importantly, the price parameters have a falling process. This shows that during the repair process, the problem of insufficient demand continues to intensify. Although both ends are being repaired, the supply side is being repaired faster because domestic demand is being repaired, but international market demand There is a problem.
Third, service industry repair is faster than industrial repair, It should be noted that many repairs of the service industry came from the restart after the epidemic, while the industry did a good job in ensuring supply and production in the early stage.
Fourth, the repair of real estate was faster than expected. In January and February this year, the sales of commercial housing in China reached 1544.9 billion yuan, down - 0.1% year on year, significantly narrowing compared with last year (the sales of commercial housing in 2022 was 13.3 trillion yuan, down - 26.7% year on year), and is expected to return to positive growth. The amount of real estate investment rebounded from a year-on-year decline of 10% to a year-on-year decline of 5.7% in January and February. Land auction data also rebounded well. More importantly, the price of commercial housing. In February this year, 80% of the new housing prices in cities were increasing month on month, and 60% of the second-hand housing prices in cities began to increase, which was faster than the original judgment.
These factors determine Fifthly, it is expected that the repair will be faster. For example, economist The confidence index has rebounded, and the OECD business confidence index (China) has also rebounded. More importantly, the expected index of manufacturing production and operation activities has rebounded from the lowest 48.9% last year to 57.8% in February this year, and the expected index of non manufacturing business activities has rebounded from 53.7% in December last year to 64.9% at present. These five characteristics have laid the foundation for the next economic recovery.
Second, Although the rebound speed is good and the repair effect is obvious, the originally expected retaliatory rebound has not occurred. At the same time, the current repair is in full swing, and the repair effect is greater than the expansion effect. The comprehensive repair of the economy not only needs further policy support, but also needs to wait patiently for economic entities to further repair the "scar effect". The impact of the epidemic on China's economy is not only a change in some parameters, but also a change in the balance sheet and the expectations and confidence of economic entities. First, although the high-frequency data reflected that many food, clothing, housing, transportation and transportation had good recovery effects, it also recovered to about 80% in 2019. At the current stage, the first part of economic growth is to reach the normal state in 2019, which is repair, and the future is expansion. Only 80% of these high-frequency data have been recovered, and the latter 20% are more difficult. This involves further optimization of expectations, further improvement of endogenous momentum, and further repair of the balance sheet. It's actually more difficult the later.
There have been some signs of weakness recently, First, the core factors supporting last year's consumption ——In recent years, there have been some signs of weakness in automobiles, especially the negative expectations caused by the exogenous impact of the big price cut of new energy vehicles and related vehicles. In 2022, the growth of automobile sales contributed one percentage point to the overall consumption. In January and February 2023, automobile sales declined by 14%, and passenger cars in the narrow sense declined by 25%. Although there was a recovery in March, there was a price war, so we should pay attention.
Second, the rapid recovery of real estate has the effect of rapid release of policies, but whether the current rapid rebound can be translated into a sustained recovery in the future remains to be seen.
Third, the contraction of external demand may have great fluctuations in the future Although the export data in January and February in dollar terms fell 6.8% year on year, narrowing the decline compared with 9.9% in December last year, for Europe and the United States, the data after the Christmas effect and the Chinese Spring Festival effect caused the data in February to be less referential, and we have to wait and see.
Fourth, employment pressure has begun to show further, Generally, the employment pressure in January is not very great. The graduation of college students, high school students and secondary vocational school students in May June is the time when the real pressure is released in an all-round way. In particular, after the Spring Festival recruitment, according to the over overdraft employment demand of the previous year, how to judge each market entity will appear. Therefore, we should be cautious about the current repair effect, especially for the latter 20% of the repair, how to further strengthen, we should have some profound understanding.
More importantly, whether the transformation from repair effect to expansion effect is smooth is a key to the sustainability of various policies and expectations. Therefore, we suggest that further efforts should be made to deal with the production loss, supply loss and demand loss of 20% in the future, focusing on the grasp of policies in the process of transformation from the repair effect to the expansion effect. It may be difficult to further consolidate market confidence by relying solely on local traditional investment promotion methods, and also difficult to complete the transformation from the repair effect to the expansion effect.
Third, although the prospect of economic recovery in 2023 is very optimistic, we must be cautious, and make a comprehensive and in-depth inventory of the near future and long-term concerns in the process of economic recovery. There is no problem that China's economic growth will reach the target of about 5% this year. The reason is simple. First, the repair effect is still strong this year. According to our calculation, the repair effect alone will contribute about 2pp to GDP growth. Second, the recovery of real estate. The repair effect of macro policies directly on the real estate rescue. Last year, the drag of real estate on the economy may reach 1.2pp, and this year, the drag of real estate may be reduced to 0.2pp. Third, this year is the year of transition, which is the key year for new cadres to work hard in an all-round way, and its expansion effect is also very obvious. There is no need to worry about China's economic recovery this year. On the contrary, we should consider the balance between some foresight and near worry in the recovery process from the current optimistic environment.
First, although the decline in external demand is an inevitable result of global economic weakness, demand effect and substitution effect should be considered. If there is a hard landing in Europe and the United States, China and the United States will enter a new stage of decoupling and chain breaking, and the medium-term phenomenon of declining foreign demand needs to be considered comprehensively.
The second is real estate, Stimulated by the policies of ensuring the delivery of buildings, "three arrows" and demand release, the short-term rebound is very important, but from the perspective of long-term mechanism, how to form a new business system and business model of real estate needs to be focused on. It would be very dangerous to simply return to the past cycle of chaos control and still adopt the practice of using bubbles to support the economy. Therefore, more patience is needed in real estate regulation. More efforts should be made on the policy side, especially on the supply of government track.
The third is to consider the variation of epidemic situation under the condition of Class B and Class B management. Comprehensively consolidate the improvement of market participants' expectations, and implement the important instructions made in the Central Economic Work Conference and the government work report. Give clear response to some wrong thoughts; We will effectively restrict some unfavorable remarks; In terms of system, we should take good measures to stabilize the confidence of private economy; For the continuity of macro policies, we should give some assurance instructions to prevent the mistakes of premature tightening and excessive tightening in 2021. Because many people in the market are worried that the credit was sufficient in January and February, but whether there will be a new round of credit tightening in the third and fourth quarters, leading to excessive volatility of liquidity. In this regard, we may have to take further measures.
More careful consideration should be given to some medium-term issues. This year, local governments are confident. However, many local governments have adopted the old model, the traditional model of attracting investment and expanding infrastructure, and achieved short-term targets through debt concealment and non-standard expansion. Major reforms may be needed to correct these issues. At present, a new round of reform has begun through institutional reform. Further reform plans should be sustainable, and further systems should be comprehensively optimized, so as to stabilize expectations, consolidate the current repair, and move forward to expansion through a new round of reform.
(Based on Liu Yuanchun's speech at the CMF monthly macroeconomic data analysis meeting on March 16, 2023, the theme of which is "The wind blows the flag - China's economy in a mild recovery", which has not been approved by me.)
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