It's been a while since the pandemic ended, but the current economic situation hasn't recovered as quickly as many expected. The latest economic data showed that the manufacturing PMI fell to 48.8% compared to 49.2% in the previous month, while the non-manufacturing PMI was 54.5% and 56.4% in the previous month. Economist Ren Zeping pointed out that the key now is not just to revive the economy, but how to carry out a strategic economic rescue.
The economic downturn reflects the weakness of the domestic consumer market. Comparing the economic situation before and after the epidemic, the obvious difference is that before the epidemic, China's economy was on an upward trend, people's incomes increased, and consumption continued to grow. But after the pandemic, economic growth slowed down, household incomes fell, and more people began to shift their funds to savings or repayments.
Although we are now seeing a gradual recovery in some areas, such as tourism, most consumers are still spending cautiously. Despite the easing of lending policies, a lack of consumer confidence has made these efforts seem inadequate.
To understand the root causes of the weakening of consumption, we need to look back at China's development trajectory since the reform and opening up. At that time, China was transitioning from a planned economy with a shortage of materials, which led to a strong market demand. In the 80s, home appliances became the focus of people's consumption. But in the 90s, the commodity-led economic growth model weakened, leading to weak consumption. As a result, asset class consumption has gradually risen, especially the rapid development of the real estate market. But with that comes increased debt pressure on the population.
Over time, this debt-dependent consumption has placed a heavy burden on the population. Many people find that in order to buy a home, they have to take on a long-term loan. And this also means that their future spending power is limited.
External factors have also increased the pressure on the economic recovery. China has now emerged as the world's second-largest economy. But it also brings competition and challenges with Western countries. In the face of Western technological blockades and supply chain disruptions, how to maintain stable growth is a problem that China must face.
Internal and external challenges have both hit China's economic development in an unprecedented predicament. How to balance the interests of the government, enterprises and the people is the most urgent problem to be solved at present.
The conclusion is that in order to truly restart consumption, we need to solve not only short-term economic problems, but also long-term structural problems at the root. I hope that in the future, we can find a balance that can not only ensure the living standards of the people, but also maintain the sustained growth of the economy.