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Macro Economy

Monthly Review on Macro-Economic Performance (No.5, 2018)


Issue No.5, 2018 (Total 101)


The overall economic operation remained stable in June, the scenario in which the supply-side growth outpaced demand-side growth had been changed, and the balance of supply and demand was better than in the previous few months. Viewing from the demand side, the cumulative growth of fixed assets investment dropped by 0.1 percentage point month on month, and the growth rate became narrowed significantly. While infrastructure investment declined, the real estate investment maintained a relatively high growth, private investment, manufacturing investment and other market-led investment growth all rebounded; the total retail sales of consumer goods increased by 0.5 percentage point month on month. Exports remained stable. On the supply side, the industry growth increased by 6.0% year on year, down by 0.8 percentage points from the previous month, and the growth of industrial electricity consumption decreased tangibly. The price performance was moderate, CPI rose steadily, and PPI rose slightly. The macroeconomic leverage rate was further consolidated, off-balance-sheet financing continued to shrink, and credit growth continued to slow down. Generally speaking, China’s macro-control has shifted from the policy portfolio of “leveraging” plus “steady growth” to the policy mix of “de-leveraging” with “quality”. Strategically, the long-term and arduous nature of de-leveraging needs to be well acknowledged to avoid adjusting the policy orientation due to slight economic fluctuations. Tactically, we need to grasp the rhythm and intensity of de-leveraging in a flexible and efficient manner to avoid disposing risks and trigger secondary risks. In the second half of this year, China’s economy is facing many challenges, such as the escalation of Sino-US trade frictions, the increase of downward pressure on investment, and the accumulation of contradictions in the real estate market. While adhering to the general principle of pursuing progress while ensuring stability, efforts need to be made to strengthen the coordination of macro-policies so as to avoid multiple risk points stimulating and forming resonance effects at the same time. Fiscal policy needs to be more active, monetary policy and macro-prudence need to be optimized, de-leveraging needs to be emphasized, real estate regulation and control need to be combined in a smooth and stable way, steady investment needs to flesh out the environment and efficiency, and the promoting of high-quality development needs to be accelerated. We need to take multiple measures to consolidate the foundation for a steady and healthy economic development.