Three Uncertainties Are Troubling China'S Future Economic Development

Will investment decline go beyond the bottom line of stable economic growth and whether export growth will happen?

At present, although the market consensus is expected that the economic growth in the second half of this year will face a certain downward trend, whether macroeconomic policies will be adjusted accordingly will still depend on the three major factors, such as the decline in investment, the decline in export growth and the rising risk of inflation.

Therefore, the above three uncertainties are plaguing the future direction of China's economy.

At present, the market's concerns about the continued decline in China's future investment growth mainly come from the continuous decline in the growth of manufacturing industry, because regional economic planning and other factors can hedge the uncertainty caused by the decline in fixed assets investment by real estate regulation.

Indeed, the current growth in manufacturing industry has slowed markedly since the beginning of this year.

From the analysis of many factors that affect the growth of manufacturing industry in China, the policy effect of economic stimulus is coming to an end, and the active regulation and control of energy saving and emission reduction and elimination of backward production capacity have all directly or indirectly affected the slowdown in manufacturing growth.

Although the rate of decline in the growth rate of industrial production has slowed down, the question is whether the slowdown in the growth of manufacturing industry will lead to a further decline in investment growth. If the investment growth rate falls beyond the critical point that we can afford, and may slow down the growth of employment, that means that macroeconomic policy will be under the pressure of adjustment.

Therefore, the slowdown in manufacturing growth has led to a fall in investment growth, which has become one of the uncertainties affecting future economic growth.

In addition to worrying about the uncertainty of investment decline, whether the export growth will appear a "lagging" sudden decline is also an uncertain factor that affects the current China's economy and its macroeconomic policy changes.

This uncertainty comes from the inconsistency between the two sets of data.

On the one hand, from the analysis of China's export growth this year, the export situation has greatly exceeded the market expectations.

Data show that China's exports grew by 21%, 45.7%, 24.3%, 30.5%, 48.5%, 43.9% and 38.1% respectively in the 1-7 months of this year. On the other hand, China's new export orders index has dropped in the past 4 months, and the growth rate in the previous month was 54.5%, 54.5%, 54.5% and 4-7 respectively. This indicates that China's export growth will probably be callback in the future.

That is to say, in the second half of the year.

However, from the current narrowing of the new export orders index, we continue to narrow down and observe that although the market consensus is expected that China's export growth will definitely come down in the second half of the year, the question is whether there will be a "lagging" sudden drop in the export growth rate in the second half of the year, because once this situation occurs, it will probably lead to a moderate adjustment in macroeconomic policy and may affect future economic growth.

Therefore, whether there will be a sudden decline in export growth in the second half of this year will also become one of the uncertainties affecting the current and future China's economy.

In addition, with the recent rapid rise in the prices of agricultural products, new factors that affect prices have triggered a moderate rise in the market's expectation of inflation in China in the future.

As inflation expectations are likely to become reality, this will inevitably lead to adaptive adjustment of macroeconomic policies (mainly monetary policy), and will also have a great impact on future economic growth.

In fact, the growth rate of PPI in the 5-7 months of this year was 7.1%, 6.4% and 4.8% respectively. The purchasing price index of manufacturing in 5-7 months increased by 58.9%, 51.3% and 50.4%, respectively. PPI and the purchasing price index of manufacturing industry showed a continuous downward trend, indicating that the pressure of price rise has greatly slowed down.

However, in July, CPI grew by 3.3% over the same period last year (slightly exceeding the market expectation), especially the price rise of agricultural products caused by frequent natural disasters and speculative speculation has become a new factor of price increase, raising the inflation expectations of the market, especially the possibility that prices will rise again in the second half of the year.

Moreover, the inflationary pressure caused by the rising price of agricultural products also belongs to the input inflationary pressure, which also increases the difficulty of macro regulation.

Therefore, inflation expectations now have unexpected characteristics, which are caused by the rising prices of agricultural products. Therefore, the adoption of policy measures to curb the rapid rise in prices of agricultural products is crucial to easing inflation expectations.

Therefore, whether we can manage inflation well and stabilize inflation expectations also increase the uncertainty of China's future economic and macroeconomic policies.