尽管道路崎岖不平,但经济增长在招手 - 2023-08-07


The nation saw year-on-year GDP growth of 6.3 percent in the second quarter, with the figure for the first half standing at 5.5 percent compared to the same period in 2022, said the National Bureau of Statistics in mid-July. The results to many were slightly slower than expected, as earlier expectations by the market were around 7 percent. But what we see from the results is the normal fluctuation of the economy in a certain range. In addition, given the impact of the three-year COVID-19 pandemic, deep adjustments of real estate, and the superposition of the entire global economic situation and geopolitical patterns, the recovery that China is going through is more complicated, and different from traditional recovery models.

Based on the figures recorded in June and the development trend of various parameters, we think the bottom of most indicators may have appeared, which is to say, new drivers and supportive forces of China's economic growth will soon gain momentum. And if the government can step up the implementation of a number of targeted, well-combined and coordinated policy measures in various areas critical to securing stable growth, employment, risk prevention and other major fundamentals, the economy is very likely to display a faster recovery in the third and fourth quarters. To this end, efforts should be made in several of the key areas outlined below.


Though still underway, there has been some substantial progress seen in the consumption sector. The sector surged 8.2 percent year-on-year in the first six months, and the contribution rate of final consumption expenditure to economic growth reached 77.2 percent, significantly higher than last year. Consumption in June increased by 3.1 percent year-on-year, which — though at a slower pace — is a result partly due to a higher base in June of last year.

In the next step, with overall income growth rate gradually returning to a normal track and the introduction of consumption expansion policies, consumption growth will further accelerate. However, it should still be noted that consumption is a slow and often long lag-time variable, which depends not only on current consumption and consumption policies, but also on consumer expectations of overall future income. Therefore, expansion of consumption itself will not be accomplished by mere short-term policies. Reforms in income distribution policies and institutional policies will also be needed to achieve that goal.


Housing has been a major concern over the past several years. Before going deep into the issue, we had better take a look at recent early repayment uptrends. Such a trend is actually a natural phenomenon as it is the adjustment of household balance sheets after the pandemic, and also the result of people pursuing maximum returns according to changes in asset prices. Last year, many wealth management products reported losses, diminishing private investor interest in the sector. And now, with the fluctuations in housing prices, real estate investment is also getting affected.

In 2022, commercial property sales plunged by nearly 5 trillion yuan ($696 billion), and according to the current trend, the plunge this year may deepen by another 1 trillion yuan. Early repayments are rational adjustments made by households in accordance with the current environment. It may not necessarily be their aim to seek debt minimization, but it definitely represents income maximization. For instance, the current deposit interest rate in China is less than 2 percent, but the original lending interest rate is higher than that. So seeing things from a rational perspective, people naturally will act accordingly.

The above-mentioned factors may be helpful when seeking a way out for the housing sector. To help real estate recover, a focus should be on improving the sales side of the sector, that is, to encourage inelastic demand, and increase real estate sales and capital backflow while adjusting expectations. While ensuring liquidity for the real estate industry to prevent setbacks, it is advisable to have more policies and investments aimed at the construction of low-cost, public rental and government-subsidized housing projects. The government can establish public rental housing funds to acquire existing properties, which will not only shore up the sector against headwinds and help develop more real estate projects, but also address lingering housing headaches haunting some low- and middle-income earners, and as a result spur more consumption from these two groups.

Private sector

In terms of the private sector, there are two issues worthy of more attention. The first is declining private investment. In China, private investment is mainly concentrated in real estate, the tertiary sector and manufacturing. At present, the performance of these industries is still relatively sluggish, resulting in negative growth in private investment. In addition, entrepreneurs are still not confident in future returns on their investment. Different enterprises may have concerns over different issues, such as supply chain security, or the possibility of declining returns. But such concerns have undoubtedly led to weaker investment appetite in the private sector. In addition, small and medium-sized enterprises, which account for a significant market presence, are also facing pressure acquiring capital through credit services, and policies to this end are also not strong enough to improve their sentiment.

Since July, Premier Li Qiang and heads of many ministries and commissions — including the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Industry and Information Technology — have intensively presided over enterprise forums and roundtable meetings, and many of the invited enterprises are private companies. These symposiums can stabilize their confidence now and in the future. This facilitates an understanding of the situation at the grassroots level so that the next step of the policy mix can be effectively carried out.

As for Chinese private-sector players, it is common knowledge that they contribute more than 50 percent of tax revenue, more than 60 percent of China's GDP, more than 70 percent of technological innovation achievements, and more than 80 percent of urban labor employment. They also make up more than 90 percent of the total number of enterprises. It is impossible to rely only on State-owned enterprises to spur the nation's economy with a sluggish private sector. Therefore, we must resolutely support the private economy to become bigger, stronger and better.


The unemployment rate for those aged between 16 and 24 stood at 21.3 percent in June. China is not the only major country that has experienced high youth unemployment in the post-pandemic period. For example, the unemployment rate of the demographic once soared to 27 percent in April 2020 in the United States due to the pandemic, but has improved dramatically since then. In Europe, the figure was once as high as about 21 percent, but has leveled off now. Even now, in Arabian countries, the figure was seen to be around 24 percent recently.

Excluding pandemic-related causes, the current low employment condition is indeed due to cyclical, structural and institutional factors. Especially on the supply side, young job seekers flooded the employment market due to the expansion of higher vocational enrollment in 2019.Business instability and interruptions caused by the pandemic over three years and the increased supply of students who studied abroad during the pandemic have kept the current youth unemployment rate at high levels even when the economy was on a normal track. Also, the youth unemployment rate in 2019 was already relatively high, and the situation was exacerbated by the pandemic since early 2020.

In addition, with the rapid development of technology and adjustments by industries, human resources training services cannot keep pace with market transformations, resulting in structural distortions — both job seekers and employers find it hard to meet their respective needs.

In response to this issue, the government has also taken many measures, and various localities have introduced customized policies to improve the situation. Of course, simple countercyclical approaches will not be strong enough to overcome current challenges. More vigorous and broader policy design is needed to this end.

Solving this issue requires some policies aimed at the structure of the system itself. For example, universities, as part of the overall job and career training system, should be more forward-looking and precise in establishing academic majors. In addition, the government should plan ahead vis-a-vis the impact of future technology on employment, and have a forward-looking layout in industrial policies and financial subsidy measures.

In conclusion, we believe that the nation's economy in the first half and the third quarter, may still be slower as it faces some pressure — especially the volatility of real estate, which will still go through a difficult period in August. The economic growth rate may slow down from 6.3 percent in the second quarter to less than 5 percent, with the base effect, policy shift and real estate adjustments weighing on overall performance. Starting from the end of the third quarter, with the rollouts of systemic policy plans taking effect to stabilize growth and curb risks, domestic circulation may see an uptrend. The fourth quarter will be a key period to determine the effectiveness of policy implementation. Short-term fluctuations in key data are not sufficient reason to be in any way pessimistic on whole-year economic performance.

The writer is  Liu Yuanchun, president of the Shanghai University of Finance and Economics. This article is a translation of his interview to guancha.cn, an online news and comments aggregator in China.

Source: China Daily





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