[Economic Daily] Liu Yuanchun, Liu Ruiming: Stimulate Market Vitality to Hedge Economic Downturn

China’s social investment, consumption, and prices have been stable from January to February in 2019, coupled with a rapid growth in some new industries and momentum. These are presented by a year-on-year growth in domestic fixed asset investments (6.1%), total retail sales of consumer goods (8.2%), domestic online retail sales (13.6%), consumer price index (1.65%), and producer price index (0.1%).

One of the most important micro-foundations for these relatively stable indicators is the improvement of market vitality and confidence. According to the statistics, some progress have been made with the policies of promoting stable growth and reforms as figures from June 2018 to February 2019 showing Chinese consumer confidence index increased from 118.2 to 123, banking business index from 66.4 to 68.4, non-manufacturing business expectation index from 60.8 to 61.5, and new import order index from 48.2 to 51.6.

On the other hand, the downturn pressure originated from China’s macro-economic transformation, structural problems, and cyclical issues is showed by certain economic indicators. According to the National Bureau of Statistics from January to February in 2019, added value of industrial enterprises above designated size remained at a low level even with a year-on-year growth of 5.3%, while there is a room for improvement of manufacturing PMI (49.2% in February). Affected by trade friction and weak global economic recovery, the situation of foreign trade is grim. Besides, some entrepreneur expectation index and leading index started to change, along with certain reversed expectation.

As for external environment, other major world economies including five Asian countries, North America, and European OECD members showed obvious decline in economic growth with a trend of low composite leading index and PMI in 2019, which indicates a rising pressure from economy downturn. In this case, China should further intensify and accelerate reforms in order to create favorable conditions for the private sectors and real economy, as well as counteract the negative factors from the external environment.

Liu Yuanchun, Vice president of RUC

Liu Ruiming, professor of National Academy of Development and Strategy, RUC

The original article was published at here.