Strategy
Date:2019/11/15

On November 14, 2019, the National Bureau of Statistics of China disclosed the information related to national economic operation in October. Judging from the dimensions of industrial development, employment, consumption, foreign trade, and foreign investment, China’s economy maintained a generally stable performance.

In terms of specific data performance, in the first ten months this year, the total value added of the industrial enterprises above the designated size grew by 5.6%, same as that of the first nine months this year; the total retail sales of consumer goods reached RMB 33.48 trillion, up by 8.1%, and 0.1 percentage point slower than that of the first nine months this year; the investment in fixed assets (excluding rural households) was RMB 51.09 trillion, a year-on-year growth of 5.2%, and 0.2 percentage point slower than that of the first nine months this year; the newly increased employed people in urban areas numbered 11.93 million, which means that whole-year target of 11.00 million employed people was accomplished in advance. In October, the total value of imports and exports was RMB 2.71 trillion, down by 0.5% year on year, 2.7 percentage points less compared with the previous month.

What cannot be neglected is that affected by localized factors, the economic data in October were subject to some downward fluctuations, among which the relatively significant one was food inflation caused by the rise of pork prices. However, judging from the four common dimensions of the macro economy, namely, growth, employment, prices, and balance of payments, China’s economy maintained a stable performance, with economic indicators kept within a reasonable range.

In terms of specific factors of economic growth, the auto sales showed a continuous higher negative growth, for two reasons, i.e. the promotion in June; and people’s willingness to consume being suppressed by the economic downward pressure. The growth of infrastructure construction also came under downward pressure. In the first ten months this year, the broad infrastructure construction grew by 3.4%, 0.1 percentage point slower than that of the first nine months this year; the narrow infrastructure construction grew by 4.2%, 0.3 percentage point slower than that of the first nine months this year; however, with the proactive policy support, such circumstances are expected to improve next year. In terms of production, the economic data performance basically met the expectation, as there was a relatively small fluctuation within the seasonal downward range.

Considering the current performance of China’s economy, there is still relatively sufficient space for the monetary policy. In the short run, it is inappropriate to adopt a deluge of stimulus policies. Instead, more emphases should be placed on structurally improving the policies to guide funds into the real economy. For the fiscal policy, in the short run, more efficient efforts should be made to implement the polices such as the advance issuance of quotas for special bonds and the requirements on capital funds for infrastructure construction projects; and greater efforts should be made to stabilize the sources of investment in infrastructure construction so that such investment can play the underpinning role.


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