According to the data of the National Bureau of Statistics, the mainland's economic performance in the first quarter was better than market expectations, with a year-on-year increase of 5.3% at constant prices. Hereby, Zhi News invited Professor Zhuang Tailiang, executive director of the Lau Chor Tak Institute of Global Economics and Finance of the University of Hong Kong Chinese, to interpret the economic data of this quarter, he said that although the export performance has slowed down, causing concerns from the outside world before, but this time the retail sales data is eye-catching, supporting the growth of GDP and relieving the doubts of the foreign sector.
Data slaps Yellen's "overcapacity theory" Expert: Output should be increased
Professor Chong Tailiang, Executive Director of the Lau Chor Tak Institute of Global Economics and Finance, University of Hong Kong Chinese
Straight News: Recently, U.S. Treasury Secretary Janet Yellen claimed the so-called "overcapacity" problem, based on this production capacity data, how will you analyze the performance of this economic data?
Professor Zhuang Tailiang: Yellen said that we have "overcapacity", and her "overcapacity" is a little different from our country's definition and view of "overcapacity". Our "overcapacity" means that if a factory can do 100 units, but you only do 75 or less, it is overcapacity. In fact, for the country, overcapacity is not good, because you do not make full use of your production capacity, and the country wants to do more. But when Yellen says we have "overcapacity," that is, you're doing too much, you're doing more than the world needs, and hopefully you're doing less. But now our production capacity figure is 73.6%, in fact, we are not fully utilizing the capacity of our factory. In fact, the world is very large, even if the electric vehicles produced by our country are relatively small compared to the world market. So I think we are not doing too much, we should increase our output, especially the "new three" that are stronger: electric vehicles, lithium batteries and solar cells. I think the world is such a big market, in fact, it is enough to absorb the production capacity of our country.
GDP has performed better than expected Retail has become the GDP engine
Straight News: We can see that the gross domestic product (GDP) in the first quarter was actually better than expected, with a year-on-year increase of 5.3%, exceeding the market's original expectation of 5%. In your opinion, the possible causes of this, or which sector have grown more sharply?
Professor Zhuang Tailiang: If you look at GDP, there are actually some exports, but the growth is relatively not as high as before. But if you look at retail sales, it's grown a lot, and it's also grown in terms of investment, it's also in terms of government spending, so it's basically stable. Moreover, we have seen a relatively high growth in retail sales, that is, the public's consumer confidence is slowly building.
The tertiary industry has bright data, and the service industry has become the key to high-quality development
Straight News: On the other hand, in fact, the tertiary industry is growing faster than the service industry. What do you think is the outlook for the mainland economy in terms of the service sector?
Professor Zhuang Tailiang: The country's service industry has fallen a little bit in the past few years of the epidemic, because there is less contact between people. Now the big cities are recovering a little more, for example, Shanghai and Guangzhou are higher. I believe that as the pandemic has passed and now slowly reopens, our service sector should grow slowly. The growth of the service industry is very important to the country, first, it will attract some young people with a relatively high level of education, and there will be a demand for his type of work in the market, and the second is that it can be in line with the world, because such a big country will eventually have to transform to the service industry, otherwise it will slowly "fight cheap" with some places, do those manufacturing production, and we don't want to go in that direction. We hope for the development of high-quality, high-tech and high-service industries, and I believe that our country's service industry as a whole will grow rapidly in the next two years.
High-tech output has grown significantly, and the 14th Five-Year Plan leads the way to high-quality development
Straight news: That is, there will be a relatively significant growth in high-tech aspects.
Prof. Zhuang Tailiang: Yes, in fact, in our "14th Five-Year Plan", it is clearly mentioned that the average annual growth rate of R&D investment in the whole society should be higher than 7%. Looking back at the first quarter now, in fact, there was a high growth in high-tech output above the scale. Therefore, we are moving towards a high-quality and high-tech direction, hoping to produce more output with less energy as much energy as possible.
Disposable income rises and the economy enters an upcycle
Straight News: Let's talk about the income of residents, in this regard, do you think that our consumption data has improved significantly, but in fact, what is the relationship between this and the increase in our national per capita disposable income? Especially in terms of the per capita disposable income of rural residents.
Professor Zhuang Tailiang: People's consumption depends on disposable income. This time, the increase in disposable income is more obvious, that is, if you have an increase in income, your confidence in consumption will be improved, and there will be no long-term downturn. So I believe that our downturn cycle is over, and now it's an upward cycle.
Poverty alleviation has achieved remarkable results, and rural revitalization has become a new driving force for boosting the national economy
Straight News: Can the improvement in consumption data, especially the significant increase in rural economic income, that is, the per capita disposable income of rural areas, be understood as the result of poverty alleviation or rural revitalization?
Professor Zhuang Tailiang: In fact, rural income and income distribution are very important to the country. In rural areas, the relative income in many places is lower than that in the cities, so it is necessary to increase the income in the rural areas. The general direction of boosting the consumption of the whole country is to increase and synchronize our national income as much as possible. If only a few cities have money, it will not be so strong to increase the consumption of the whole country. But if you say that the relatively poor places are slowly getting rich, then they can increase the country's consumption, and they can slowly change from an export-led country to a consumption-led country, and it is very important to boost rural consumption.
The Guangdong-Hong Kong-Macao Greater Bay Area is mutually beneficial and reciprocal, and Shenzhen's vitality attracts people from all over the country
Straight News: You often go to Shenzhen, based on your personal observations and feelings, what do you think is different from the consumption in the mainland?
Professor Chong Tailiang: Actually, many people say that Hong Kong people go north to spend, and I myself have taught or consumed in the mainland, and what I feel is that Shenzhen is a very dynamic city, and so is Guangzhou, which is very competitive. The restaurants and other aspects are relatively new, and the competitiveness is also quite large, which also attracts a group of Hong Kong people or residents from other cities to spend in Shenzhen. My most intuitive feeling is that every weekend, there are actually a lot of people who go to those big shopping malls, and the people are crowded, and the citizens are willing to spend. And now that there are many new shopping malls being built, I believe that Shenzhen's consumption and economic growth should increase. Slowly, with the development of the Greater Bay Area, each city will attract different people, and there will be many consumers from Hong Kong, Shenzhen and other cities in Guangzhou or other cities. I believe that as the epidemic gradually opens up in the past two years, the people of the Greater Bay Area will know more about each city, more people will travel to other cities, and the entire Greater Bay Area will develop better.
Straight News: In fact, the entire Guangdong-Hong Kong-Macao Greater Bay Area is mutually beneficial, and the development of each city is beneficial to other cities.
Fitch Ratings' outlook is unreasonable, advocating strength and data to convince the outside world
Straight News: Let's go back to the more international part, following Moody's downgraded China's rating outlook last year, another international rating agency, Fitch, followed suit, although maintaining China's sovereign credit rating unchanged, but adjusting the rating outlook from "stable" to "negative", as for the default rating still maintained "A+", what do you think is the reason for this?
Professor Chong Tailiang: I don't think it's very reasonable. Because our country's economic growth is strong, inflation is not particularly high, and the employment situation is quite good, judging from these economic data, basically the economy is running quite well. Of course, a downward revision of the outlook will have some impact to some extent, such as the possibility that the cost of issuing bonds will become higher, which may have a little impact. But in the long run, I think the prospect of the country, we have to use strength and data to convince foreigners, in fact, our country is developing very well, and it is not so reasonable for you to downgrade a rating. I believe that there is no data basis for this downgrade, and the most important thing is to do our best.
Shenzhen Satellite TV Direct News Hong Kong-based correspondent (intern) Liang Jiaxuan
High-interest rate environment hits the economy and the U.S. stock market is at risk of a correction
Straight News: Although the U.S. stock market has fallen from its high level recently, the overall performance is improving, but some people also point out that the U.S. economy is actually overly dependent on the Magnificent 7 (Big 7), "without the Big 7, U.S. stocks are nothing", what do you think?
Professor Zhuang Tailiang: Actually, yes, because the interest rate in the United States is so high now, it has been high for a while, judging from the past data, the economy should be about to pull back, and the stock market will also pull back. If you look at the performance of the stock market in April and last month, it's actually clear that it's falling. I believe that the U.S. stock market will not be able to rise like this for a long time, and the entire economy cannot afford to pay so much interest. The U.S. is now experiencing high interest rates, but I believe that high interest rates will have a big blow to the economy and a heavy burden on the U.S. treasury to repay interest. If you have invested in the U.S. market, you should pay attention to whether there is a risk of a correction in the stock market, and what is the financial situation of the U.S. itself. So, I think there are relative risks, and you shouldn't blindly say that you think the U.S. stock market will be good.
Borrowing is hidden in the future, and the PE of American companies reveals that the stock price is inflated
Straight News: You just mentioned the issue of interest rates, on the other hand, the current dollar continues to rise, and at the same time the United States is stimulating exports, what do you think?
Professor Zhuang Tailiang: The United States does not rely on trade to drive GDP, but mainly on consumption. Why is it still sustained like this now? It's that at the time of the epidemic, the government actually spent a lot of money into the accounts of citizens, because in fact, Americans don't have a lot of money in bank accounts, and the government puts more money into bank accounts than their average savings. In addition, the Biden administration has waived some tuition fees, etc., so the money they have saved may bring consumption. The Americans themselves are willing to spend, that is, they have a high consumption ratio, so their monetary and fiscal policies will be more effective, and then they may drive the economy for a while. However, all the time the money is borrowed and will be spent. At present, the issuance of U.S. bonds is actually not so strong, because it is more difficult to digest the reissued bonds. Therefore, it is said that there are actually some hidden worries about the economy now. You see that not all economic data is actually good, for example, Tesla may reduce some of its workforce. At present, several large companies in the United States are driving the stock market, in fact, they are mainly based on technology, but technology has bottlenecks, and citizens will not spend unlimited money on technology products. So let's just say that there are some people who make the stock market too high because of excess funds, but if you look back at his PE (price-earnings ratio) and then look at the rate of return on his money, it is actually not enough to support the current stock price.
"There is no reason for a debtor to sanction a creditor country"
Straight News: Last question, regarding trade restrictions with China, especially in AIGC and semiconductors, what advantages do you think China still has in these industries, and will China be able to break through the trade restrictions of the United States in the future?
Professor Zhuang Tailiang: I think that we actually have a lot of people in China, a lot of talents, and a lot of government resources, and we will have a way out for many technologies that we will slowly research on our own. We can also make use of our own high technology as much as possible, such as some military-related technologies, but can we slowly switch them to civilian use? In the field of science and technology, we will not be able to do it if the United States does not have any restrictions on us. And if it's a civilian thing, it's not necessarily a high-tech pursuit. I think that if it is an ordinary civilian product, our country has the ability to manufacture it. Moreover, China and the United States are two big countries, and it is not that one can sanction the other, and there is no reason for us to say that one debtor country should sanction one creditor country. Therefore, I believe that the effectiveness of US sanctions is always limited, and the most important thing is for our country to strengthen itself and develop itself.
Author丨 Shenzhen Satellite TV Direct News Hong Kong-based correspondent (intern), Liang Jiaxuan