IAR held an analysis meeting for China’s Q3 macro statistical data on October 29, during which, the project team of China’s Macroeconomic Analysis and Forecast released its “Q3 2019 China’s Macroeconomic Analysis and Forecast Report”. The meeting was attended by experts from industry and academia as well as reporters from more than 20 news outlets.
In his opening remarks, Prof. Liguo Lin, the Associate Dean of IAR, said that the project team of “China’s Macroeconomic Analysis and Forecast” has been regularly producing reports proposing useful economic insights, policies and long-term governance options to the government, the corporate and community sectors, making it one of the reputable academic brands for both IAR and SUFE. Prof. Yuanyuan Chen, Assistant to the Dean of the IAR, presided over the meeting.
The project team members, Associate Research Fellow Mei Zhu and Lei Ning and Assistant Research Fellow Lin Zhao and Huabin Wu, interpreted the report from the topics of “CPI, PPI, Consumption and Investment” “Real Estate, Household Debt and Labor Market” “Interest Rate, Foreign Trade and the International Market” “Fiscal Policies and Finance”, respectively.
The Q3 report, themed on “counter-cyclical adjustment and structural reform pursued simultaneously to promote growth”, pointed out that GDP grows by 6.2% year-on-year in the first three quarters of 2019, which is in line with the annual target that the government set in the beginning of the year. It is remarkable for China, a more than $10 trillion economy, to achieve such a growth rate in the face of rising trade protectionism and unilateralism worldwide. However, taking into account China’s development goals, especially the task of doubling the 2010 GDP and per capita income for both urban and rural residents by 2020, this growth rate is close to the lowest growth target level. The GDP growth rate by quarter, 6.4% in Q1, 6.2% in Q2 and 6% in Q3, shows that downward pressure has continued to increase in the economy.
The project team believed that China should address the need for stable and sustainable growth and balanced and adequate development through its own efforts. The countercyclical policies are necessary measures to deal with the external negative shocks and cyclical effects of the economy itself. But such policies should be science-based, have rigor, relevance and practical impact and be in line with the broad direction of market-oriented reform and opening up in an all-round way.
Zhiming Liao, chief banking sector analyst at Tianfeng Securities, shared his views regarding the increase in household savings and the micro business debt in the report. He said that the household savings account deposits were better this year and it may relate to the mass bankruptcy of P2P online lending platforms and the new regulations on money management, which made money flow back to the banking system. Meanwhile, policy support to boost loans to micro and small businesses has helped ease the difficulty in securing capital loans and reduce the high borrowing costs.
Xinfeng Shen, chief analyst of macroeconomics at Northeast Securities, said that as monetary and fiscal policy are both facing dilemmas, a holistic approach should be taken when considering them. One of the biggest external factors affecting China’s economic growth, she said, is China-U.S. relations, and the trade war that the US had started did not reduce its trade deficit; the labor market mismatch also requires further research.
Xiangyu Yue, chief analyst of macroeconomics at Ping An Real Estate, found the report to be very enlightening. He pointed out that the demand of residents to reduce or avoid the risk was one of the contributing factors to the recent higher-than-expected increases in house prices in some regions. He agreed that all counter-cyclical adjustments were only temporary counter measures and the economy in the long term still depended on the market-oriented reform.
Hai Ding, general manager at Zhong Xin Capital, said that property development and investment projects differentiate between different cities and are highly sensitive to economic data. With the slowdown felt in the industry and data provided in the report, Mr. Ding hoped that the experts could offer thoughts and solutions to provide clear direction and help investors reduce the risk.
Liangliang Lu, director of macroeconomic research in asset management division at Jiangnan Rural Commercial Bank, said that though the land acquisitions and quick turnaround in the real estate industry will keep the growth between 5-10% in the next 6 months, the fall in the land transactions and the possibility of tightening regulatory policies expose the property development and investment to the risk of a cliff-like drop. Mr. Lu acknowledged the superiority of the research model and hoped that the report could provide more comprehensive forecasts on economic trends and practical advice in the future.
Changlin Guo, an associate professor at School of Public Economics and Administration of Shanghai University of Finance and Economics, said that examining the conversion mechanism between PPI and CPI data in the report could help understand the supply and demand in the market and resource allocation efficiency. He shared his observational data on government debt, which he hoped would provide some inspiration for the following research.
Yonggang Hu, a professor at School of Economics of Shanghai University of Finance and Economics, recommended that the research team should organize some meetings that explore in depth on hot social topics and invite more scholars to attend, so as to make the report more influential and professional.