Economic Growth Is Down, Inflation Is Still High &Nbsp, Tightening Policy Is Facing A Dilemma.

There are indications that China

April, "first financial and economic research," released in May, "first"

The first financial chief economist confidence index is compiled by the Manufacturing Purchasing Managers Index (PMI), with a threshold of 50%, and a confidence index above 50% indicates the economic boom.

The survey also shows that China's economic growth figures to be announced in April will also fall.

Economists surveyed expect that in April, except for the growth of total retail sales of social consumer goods, the growth rate of fixed assets and the growth rate of fixed asset investment in the first 4 months will be slightly lower than that of the same period (17.4%) in the previous 4 months. The growth rate of the fixed assets investment will decline to 14.6% and 24.7% from the previous 14.8% and 25% respectively. At the same time, the export growth rate in April will also drop sharply from 29.3% in March to 29.3%.

Consistent with the results of this survey, the official PMI index just released has released similar signals.

According to the National Bureau of statistics, China's PMI in April dropped from 53.4 in March to 52.9, the lowest level in the 7 year history of China's PMI index, lower than market expectations.

The 11 sub indicators almost all weakened, of which the new orders sub index decreased from 55.2 in March to 53.8, indicating that domestic demand may slow down in the future; the new export orders sub index decreased from 52.5 in March to 51.3, indicating that the recovery of overseas markets is still relatively weak.

The April PMI data released on the 3 th of this month triggered a renewed debate about whether China's economic growth will continue to slow down or even hard landing.

Nomura issued a report entitled "China: April official PMI index disappointing" report that the decline of new orders and backlog orders index indicates that the pace of expansion of China's manufacturing industry may slow down in the coming months.

Based on concerns about the trend of China's economy, Reuters' Chinese website published yesterday's findings on China's GDP growth rate in 2011. Combined with 19 domestic and foreign institutions surveyed, Reuters predicted that China's GDP will grow by 9.5% this year. From the median forecast of quarterly GDP, the economic growth rate will remain at 9.4% in the remaining 3 quarters of this year, down from 9.7% in the first quarter, and it will also fall slightly next year.

Many market participants attribute the weak data to the government's austerity policy.

Nomura, for example, puts forward one of the three factors that led to the decline in indices. "Because of the government's tightening policy, banks' more cautious lending behavior has led to slower growth in infrastructure spending."

Peng Wensheng, chief economist of CICC, said in an interview that "PMI declined in April, indicating that the tightening of macroeconomic policy with monetary tightening as the main mark has expanded from consumer demand to the supply side with investment and manufacturing as the center". The inhibitory effect of tight policy on CPI growth is expected to emerge in the three quarter, and inflation pressure will gradually decline.

At present, the speculation about whether the tightening policy will be loose appears again.

"PMI has been below market expectations for two consecutive months, indicating that the macroeconomic tightening policy is cooling the economy. The recent tightening of policies may not continue to be strengthened. On the other hand, the high inflation point may not be over yet, so the policy is unlikely to relax," said Yang Qingli, chief economist of China's regional bank of China.

In short, maintaining the intensity of existing policy tightening is the most likely scenario. "

Pan Xiangdong, chief economist of China Galaxy Securities, expects that the regulatory policy will be fine tuned, and "stable currency and wide fiscal" will be reflected.

In the context of high inflation and slowing economic growth, the complexity of policy choices is increasingly prominent.

Wen Jiabao, premier of the State Council, pointed out at the executive meeting of the State Council in April 13th that maintaining the overall level of price stability is the primary task of this year's macroeconomic regulation and control.

He stressed the need to maintain the continuity and stability of the current macro policy, but at the same time reminded him to "fully estimate the lagging effect of monetary policy, improve the foresight of policies, and avoid the negative effects of policy superposition on the next stage of the real economy".