GDP grew by 5.3% in the first quarter, the data is getting better and better, and the problems are getting bigger

Luo sir's words

2024-04-17 20:14Posted in Sichuan Workplace Creators

April 16 is a special day, today the Bureau of Statistics announced the mainland's economic growth rate in the first quarter, a year-on-year increase of 5.3%, better than external expectations, especially the annual growth of 6% of industrial enterprises above designated size, the most eye-catching.

According to Caixin's previous survey, economists from 14 domestic and foreign institutions have an average forecast of 4.9% for China's GDP growth in the first quarter of this year, while the estimate of the expert group interviewed by AFP is 4.6%.

The actual growth of 5.3% did exceed market expectations.

In terms of industries, the secondary industry has the fastest annual growth rate, reaching 6%, and the added value of industries above designated size has increased by 6.1% year-on-year, of which the high-tech manufacturing industry has the fastest annual growth of 7.5%, an increase of 2.6 percentage points over the fourth quarter of last year.

In addition, in the first quarter of this year, the per capita disposable income of the whole country reached 11,539 yuan, a nominal increase of 6.2 percent year-on-year, while the national urban unemployment rate dropped to 0.3 percentage points to 5.2 percent.

It is true that the economic data is getting better and better, but some structural problems behind it still exist, objectively speaking.

The data shows that although the total retail sales of consumer goods increased by 4.7% year-on-year in the first quarter of this year, the total retail sales of consumer goods in March increased by only 3.1% year-on-year, lower than the average annual growth rate of 5.5% from January to February this year.

This shows that after the Spring Festival, the growth rate of consumption has shown signs of declining.

Of course, from a longer-term perspective, many issues related to consumption itself remain unresolved, such as income growth, market confidence, and the soundness of the social security system.

Compared with consumption, the real estate sector continued to fall into decline.

According to the statistics bureau, in the first quarter of this year, the mainland's real estate development investment fell by 9.5% year-on-year, an increase of 0.5 percentage points from January to February, while the sales area of newly built commercial housing fell by 19.4% year-on-year, and the sales fell by 27.6%.

Houses are becoming less and less sellable, and the effect on the overall economy is not only limited, but may even become a drag, and real estate development investment will continue to decline if sales fall sharply and the market does not pay for it.

Real estate developers are not active in acquiring land, and for local governments, the income from land transfer fees is bound to decline again, which will affect the local debt problem of tens of trillions of yuan.

Although the economic data is impressive, the problems are not without it.

In the "troika" that drives the mainland's economy, in the first quarter, investment in fixed assets increased by 4.5 percent year-on-year, consumption increased by 4.7 percent year-on-year, and imports and exports declined by 0.7 percent, with an average of 4.6 percent.

In addition, the annual growth of 4.5% in fixed asset investment can create 6.1% of the industrial growth value, which is relatively rare from the past statistics, especially the fixed asset investment of state-owned enterprises increased by 7.8% in the first quarter, but the debt did not increase significantly.

Of course, behind the good performance of the mainland's economic data in the first quarter, the better-than-expected performance of the US economy is also a factor; not only the mainland, but also other Asian countries that have import and export trade with the United States, the export performance in the first quarter was higher than expected, which in turn boosted investment.

In the long run, real estate problems, local bonds, structural problems are still very serious, the emergence of good news is in the short term, exports are better than expected, but structural problems will still affect the overall demand, the past era of rapid growth, should be gone forever.

At a press conference at the Bureau of Statistics, Sheng Laiyun said that the mainland's real estate is supported by population, because the urbanization rate according to the registered population is less than 50 percent, and about 180 million to 190 million migrant workers have not yet achieved complete "citizenization" because less than one-third of them buy houses.

Sheng Laiyun said that the existing housing stock is mostly small and medium-sized units below 90 square meters, and with the advancement of urbanization and living standards, there is still a lot of rigid demand.

This is true in theory, but the question is, do these 180 million migrant workers have the money to buy a house today?

That's a big question.

Just because there is demand doesn't mean that you have money.

According to the questionnaire survey report of urban depositors in the fourth quarter of 2023 released by the central bank, as many as 20.2% of depositors expect housing prices to fall in the first quarter of this year, which is also the first time since 2019 that the proportion of depositors who expect housing prices to fall exceeds 20%.

Once the expectation of falling housing prices is formed, it is very difficult to attract people to buy houses in the short term, especially when it comes to houses with millions of dollars.

In addition, the new crown virus has also weakened the overall economic vitality to a certain extent, which has led to the weakening of the mainland's consumption recovery in the post-epidemic era, and it is difficult to achieve the momentum of "supply creating demand" in the short term.

What's more, today in 2024 is not the past of 2008.

Investment in railways, highways, and infrastructure construction can no longer stimulate macroeconomic growth, and the marginal benefits are also declining.

Judging from the data released in the first quarter of this year, industry is still the focus of our efforts, but in the case of insufficient domestic demand, the export market has become particularly important, and in this market, the challenges are also increasing.

During her visit to China earlier this month, Yellen warned that exporting large quantities of products to the market would disrupt supply chains and threaten industries and jobs, and German Chancellor Olaf Scholz expressed similar concerns during her visit to China.

Price advantages are indeed emerging as industry continues to increase exports, with the average price of goods imported from the mainland also falling by 2.6 percent year-on-year in March, according to a US disclosure last week.

On the other hand, the increase in the industrial productivity of the mainland is still continuing, and as of today, the mainland has produced more than 30 per cent of the world's manufactured goods, which is a very large figure that is of course difficult for us to consume on our own.

In a report at the end of March, Rhodium also wrote that mainland companies in various industries are now producing far more than domestic consumption can absorb.

In other words, the ultimate question of the market economy, such as who commodities should be sold to, is already faintly posing a greater challenge to us.

Judging from today's actual situation, the answer to this question is more in the European and American markets.

But just a few days ago, when U.S. Trade Representative Katherine Tai gave a report to the U.S. Congress, she indicated that her team was working on a new plan for tariff barriers, and when asked by lawmakers about the appropriate end, Tai said that the process was nearing completion.

In the past wave of globalization, we are undoubtedly the party that has benefited from the globalization system, and it can even be said that it is the party that has benefited the most.

But now, with the rise of trade protectionism in Europe and the United States, globalization has become more fragmented and fragmented, and even more like a group of people with different values coming together.

Just before the release of the first-quarter data, Fitch, an international credit rating agency, downgraded the outlook for the mainland's sovereign credit rating, citing fiscal spending more on infrastructure and high-tech manufacturing, while real estate is stagnant, which poses a risk to the finance.

Moody's, another major credit rating agency, also concluded that the participation of household consumption is particularly important because of the growing concerns in the United States and the European Union, which hinder the overseas development of emerging industries such as domestic electric vehicles, solar panels and batteries.

In this way, the mainland economy is vulnerable to external shocks.

On the whole, a large part of the mainland's economic growth path this year is inseparable from the old path of infrastructure investment.

In the first quarter of this year, the national investment in fixed assets was about 10 trillion yuan, a year-on-year increase of 4.5 percent, and if the real estate part is deducted, the growth was as high as 9.3 percent.

The growth of fixed asset investment has greatly exceeded market expectations, and the performance of infrastructure investment has been very good, with a year-on-year increase of 6.5%, but the rate of return on fixed asset investment has always been a common problem in the past, and whether it is better to use 10 trillion yuan of fixed investment to invest or direct money, this is still a question worth thinking about.

Of course, the old road of fixed asset investment can be followed, but the question is that if consumption is not enough to leverage the return on investment in fixed assets, then is it worth investing 3 trillion yuan a month?

Another issue that deserves attention is whether dumping really exists? This is a key question about whether Western trade protectionism will rise again, and if the tariff stick continues to be raised, it is difficult to imagine whether our manufacturing industry can withstand it.

In the first quarter, mainland exports were 5,737.8 billion yuan, a year-on-year increase of 4.9 percent. At a Morgan Stanley media conference on Monday, the agency's chief economist at mainland Xing Ziqiang said that one of the reasons for raising the mainland's 2024 real GDP growth forecast from 4.2% to 4.8% was that exports were "stronger than expected."

Xing Ziqiang said that the year-on-year growth in export value was in single digits, and the growth in the first quarter was close to 14 percent, which also showed that mainland exports are "guaranteed by price".

Exchanging price for sales volume is probably also in line with the definition of dumping in economics.

In other words, overcapacity is a problem.

Since the problem exists, it needs to be solved. To this day, our solution is still the old way, that is, to use exports to solve the problem of production capacity, and to exchange for a larger export share by ensuring price and quantity.

But in the long run, this is also a structural problem, if the price is good, of course, it is good for the consumer side, but it may not be friendly to the supply side of other countries.

With the continuous awakening of Western conservatism, once trade tariffs are formed again, will we be able to absorb the huge production capacity by then?

The ultimate question of the economy is nothing more than who to sell goods to, we produce more than 30% of the world's manufactured goods, but how much can we consume?

In some structural consumption systems, if there are no more resources to guide it, this is a time bomb, as Yellen said, we will eventually face the expansion of the economy to household consumption, but at this point in time, no one knows how long it will come.

And more initiative, undoubtedly on the consumer side of the global market.

end.

Author: Luo sir, concerned about the economy, society and everything in our world, curious about the logic behind the development of things, optimistic pessimist.

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