Has China's economy continued to recover recently? What is this year's GDP target? How much benefit do we need to release for this? Has the manufacturing sector stabilized?
Can China's economy continue to pick up this year?
The above problems are all issues that we are very concerned about, and the quality of the domestic economic operation is actually very closely related to everyone, but China's land is vast and the economy is also very complicated.
On Wednesday morning, the PMI manufacturing data for January was released, and the 49.2% index showed a slight rebound, and the prosperity level of China's economy showed a certain recovery.
Then let's use the PMI index today to talk about the relevant issues of China's economy, it is not easy to code words, welcome to like, forward, and collect.
PMI index picks up, China's economy continues to recover?
On Wednesday morning, the National Bureau of Statistics released the manufacturing PMI data for January, also known as the purchasing managers' index, which is bounded by 50, and below 50 means that the manufacturing industry is in a contraction cycle, and above 50 is an expansion cycle.
Compared with 49 percent in December, we recovered to 49.2 percent in January, showing a slight recovery, not only improving the degree of prosperity, but also ending the decline in the previous three months.
The PMI index picked up in January.
So, it's not that 0.2% growth is that big, but the end of the downward trend is actually a big step forward. So China's economy is actually starting to recover.
So why can't we go beyond 50 to enter the expansion zone? This brings us to one of the main contradictions that have plagued China's economy in the past year: insufficient effective domestic demand and a relative surplus of supply.
The demand in the market is insufficient, and the people are unwilling to spend money, which leads to fewer orders than before, which affects the start of enterprises, resulting in a series of problems in employment and wages.
Therefore, if you want to boost the PMI value and boost the domestic economy, the most important means is to vigorously stimulate the economy, boost domestic demand, and add to the growth of external demand brought about by the Fed's interest rate cut in 2024 to promote a better recovery of China's economy.
How can we do our best to boost the economy?
So, what measures should we take? In which direction will the country most likely exert its efforts in the future? It depends on the face of Yang Ma.
How can we boost domestic demand, and what stimulus policies do we need?
To boost domestic demand, the most important thing is to create demand, and there are many subdivided policies on this point, such as issuing consumption vouchers, lending to real estate enterprises, stimulating consumption more vigorously, and engaging in household appliances to the countryside and other activities.
However, in the macroeconomic field, there are only two points: the first is an expansionary fiscal policy, in which the Ministry of Finance takes the lead in issuing bonds to create social demand, thereby boosting domestic demand and stimulating the economic temperature to warm.
The second point is the expansion of monetary policy, the central bank cut the reserve requirement ratio and interest rates, and promoted the rise of large reservoirs such as real estate and the stock market by stimulating and easing market liquidity. Let shareholders make money, let housing prices stabilize and recover, and stabilize market expectations, so that people have money to spend and dare to spend.
The central bank's monetary policy plays an important role in stabilizing expectations.
These two points are very important, let's break them down. First, let's look at the first point, which is fiscal policy.
Fiscal Policy Boosts China's Economy?
Fiscal policy is actually the cornerstone of economic stability, and every time the economy needs to be boosted, both the local and central governments will boost the economy by increasing the deficit ratio and through greater economic stimulus.
For example, in 2023, we will exceed the 3% deficit rate, and with a fiscal deficit of 3.8%, we will issue 1 trillion yuan of special government bonds at the end of the year to boost the economy. We are guaranteed to achieve the expected GDP growth rate of about 5%.
Fiscal policy support, the state bond issuance to support the real economy
Therefore, at the time node of the global economic recession cycle this year, we are facing a more severe external negative moment, and we will increase fiscal spending more vigorously, stabilize market expectations, and create infrastructure and new infrastructure construction, so as to create domestic demand, which plays a key role in stabilizing the domestic economy.
After all, after the start of the project, the orders of state-owned enterprises and private enterprises will naturally increase. In order to receive more orders, enterprises will expand and recruit more employees, so as to absorb the surplus labor in the market.
Naturally, the top management has noticed this problem, and has begun to make efforts since the end of last year to strengthen fiscal policy support for the economy, and this year there is also this tone, and even the International Monetary Fund IMF released the "World Economic Outlook" mentions: China has provided fiscal policy support, resulting in more resilient developing economies. As a result, the global economy was raised from 2.9% to 3.1% this year.
Therefore, as long as the fiscal policy is liberalized to support, then it will definitely be effective and necessary. We are already on the way to action, and we have achieved some results
Monetary policy continues, RRR and interest rate cuts are coming?
In addition to fiscal policy, there is monetary policy, and monetary policy is actually more regulatory policy that we use. At the beginning of this year, the central bank actually gave us a big gift package.
On January 24, the central bank announced that it would cut the deposit reserve by 0.5% on February 5, which means that the central bank released 1 trillion yuan of long-term liquidity.
The central bank cut the reserve requirement ratio and interest rates to stimulate the economic recovery
Among them, the RRR cut means that the market liquidity is more abundant, which is good for the stock market, the bond market, the real economy, and the entire financial system, and the effect of the interest rate cut is also obvious, because the current domestic real interest rate is higher than the nominal interest rate, which leads to the operating costs of the real economy are still high.
For example, analysts at CITIC Securities said that the current effective interest rate of domestic treasury bonds, such as the 10-year treasury bond interest rate is 3.7%, and the real loan interest rate is 5.3%, which is actually very high, and the cost of corporate financing is very high.
Therefore, in order to stimulate the real economy, it is necessary for the central bank to cut interest rates, through which internal financing barriers can be broken down, so that enterprises can obtain more low-interest loans, thereby reducing the operating costs of enterprises and increasing profits.
Therefore, some experts predict that we not only need more fiscal policy support, but also urgently need to cut interest rates in terms of monetary policy, and even preferably by more than 40 basis points to release more funds and reduce corporate costs, so as to support China's economy to achieve the predetermined goals.
After the interest rate cut, the cost of the physical business will also be reduced.
So, what should we do if some people say that the problem of financial idling and the liquidity trap prevent the central bank from cutting interest rates? Financial experts from brokerage firms said that although there are some constraints in this regard, the RRR and interest rate cuts themselves are the best policies to boost confidence. In addition, China is indeed facing the problem of high actual financing costs, so interest rate cuts and RRR cuts are policies that should be sooner rather than later, and more than less.
Looking forward to the policy force, China's economy will continue to ride the wind and waves!
From the PMI data in January, we can see that the growth of China's manufacturing industry has reached an inflection point, ending the previous continuous decline, which is a positive for China's economy.
In the long run, we still need the central bank to cut the reserve requirement ratio and interest rates to provide more monetary policy, which is of great significance for maintaining sufficient liquidity in the market and reducing the operating costs of real enterprises.
Of course, we have used too much monetary policy in the past few years, fiscal policy is actually our killer weapon, as long as the top is willing to pay a certain deficit to increase domestic demand, then China's economy will soon have the momentum of growth, the creation of domestic demand can help the economy to rapid, and help China's economy ride the wind and waves!
China's economy, riding the wind and waves, ushering in a new life!
Therefore, this year, China's economy will of course face the challenge of recession from the outside, but I believe that with the exertion of monetary and fiscal policies, China's economy will be able to ride the wind and waves!
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