Shu Song: China'S Next Year'S Upward Risk Is Greater Than The Downside Risk.

Thus, the biggest risk for China's economy in the 2011 is

Economic Growth: downside risk is not big, avoid policy overreaction.

1. the basic judgement of export growth is that although China's exports are hard to return to the ultra normal growth rate before the crisis, the international competitiveness of the low-end products still exists, and the share of world trade will continue to increase in the next few years.

In 2011, Global trade growth will be between 5% and 8%, and China's export growth will be over 10%.

Since the reform and opening up for more than thirty years, China's annual export growth rate is more than 16%. From 2001 to 2008, it has experienced a super normal and 25% annual average growth rate, but it is not normal, and it is difficult to return to similar growth.

The reason is that 2001 - 2007 is the extraordinary period of global economic prosperity. The expansion of the world market is very fast. After China's accession to the WTO, the pace of integration into the world has also accelerated.

These two supernormal rules just blend together, leading to the super speed growth of China's exports.

2. investment and consumption in 2011 China's investment and consumption growth rate is still difficult to fall significantly.

Positive factors include China's domestic demand still larger, household household leverage ratio is still low, negative factors include investment and consumption will return to normal after a round of stimulus policy.

In terms of infrastructure investment, the growth rate of infrastructure investment will slow down in 2011, and the Midwest will basically be a relatively weak growth.

In real estate investment, the government may continue to take a tight stance, and it will also increase public housing and affordable housing.

In terms of investment in manufacturing, 2011 will be much larger than this year. At present, foreign investment has begun to rebound, and the capacity utilization rate of various industries is relatively high, including the steel industry.

Next year's consumption is likely to increase a bit faster than this year. On the one hand, revenue growth and wage growth are relatively fast in recent years. On the other hand, the government will continue to expand social security expenditure in 2011, including pension insurance and medical insurance.

Overall, China's economy can still achieve steady and rapid growth in 2011, maintaining a growth rate of over 9%, and the downside risk is not large.

If we consider that 2011 is the first year of the 12th Five-Year plan, the impulse and policy cycle effect of this development will be more obvious. The short-term risk is still controllable, and the government should have a more robust judgement on the real economy, and the macro policy should avoid overreaction.

Inflation is the biggest upward risk.

The current policy debate is mainly about inflation.

A basic view is that inflation has been formed, and the bottom line of policy is more than 3%. Considering the problem of rent setting in CPI weight, the actual inflationary pressure is higher than the reported data.

Inflation can not be simply attributed to the super high growth of money. It is difficult to explain the rise in vegetable prices because of the super high currency. Nor can it simply be attributed to wage increases, because wage growth is actually slow; at present, the pmission of PPI to CPI is limited.

Although the current inflation is triggered by some supply and natural factors, inflation at the current level of food prices can easily spread to the real economy and turn into a full-scale inflation in the case of abundant liquidity and negative interest rates.

Therefore, monetary policy should be tight, liquidity management and interest rate increase should not be carried out. It does not mean that tight money can inhibit the rise of vegetable prices, but can prevent it from spreading to the whole economy.

At present, measures to directly control prices in some areas may help in the short term, but in the medium and long term, it is not feasible. If the price of vegetables falls after 35 months, it is not because of the direct control of prices, but because the supply of vegetable farmers has increased.

2011 inflation level: the annual inflation level will be relatively high, between 4% and 5%; in the first half of the year, the inflation pressure will be greater than the second half of the year because of the tail factor; the inflation pressure will decline in the second half of the year because of the downward adjustment of the base and the price of food in summer, but the price of edible oil, grain and sugar is still rising at the weekly cycle. Once the grain price is raised, it will not come down as quickly as vegetable prices. It will only be adjusted after the summer grain harvest. This may happen after 5 and June in 2011.

Therefore, from the current trend, if there are no major natural disasters, the high inflation point for next year is likely to be concentrated in the first half of the year. Monetary tightening, interest rate increase and appreciation of the renminbi will also be focused on this time window.