"Stagflation Theory" And "Hard Landing" Leading The Structural Adjustment Of Spinning And Clothing Industry

Wuhan cotton group was shocked by one of its own field research results: the weaving factories, printing and dyeing factories and some small garment enterprises in Jiangsu and Zhejiang provinces were very unhappy, and six or seven of them were shut down, even worse than the financial crisis two years ago.

As upstream suppliers, they hasten to reduce total output by 1/3 and start to reduce inventories.

The direct cause of this situation is

The deeper reason is China.

At the same time, OECD, Goldman Sachs, Deutsche Bank, Credit Suisse and other institutions have reduced China's economic growth rate by 0.2 to 0.6 percentage points in 2011.

Although there has never been a lack of conflict of views among research institutions, this time they have a very consistent view on the issue of "China's economy is slowing down".

The economic slowdown is manifested in all aspects, from PMI to industrial added value, to real estate development investment, manufacturing fixed asset investment, total retail sales of social consumer goods, import and export growth and so on.

In the media interview, two global strategists at faxing bank said that the biggest danger of the world economy is not in the euro area. In China, investors are too trusting of China's economy. In fact, China's economy is the biggest bubble and has been out of control, and the risk of a hard landing is very high.

As Lu Zheng commissar, a senior economist at Xingye Bank, said, "on the one hand, the economy is slowing down, and on the other hand, prices are rebounding." stagflation theory "and" hard landing "may become the dominant sentiment in the market.

Complex braking

Economic slowdown is not surprising. Economists are going to slow down because of control.

From January last year to June 14th this year, the Chinese government accumulated 12 times, raising the deposit reserve interest rate by 6 percentage points.

In theory, the freezing of bank loans amounted to 1 trillion and 800 billion yuan, making it more difficult for enterprises to borrow.

The deposit and loan interest rate has been raised 4 times since the first increase in October last year, though it is not as strong as the reserve requirement ratio has been raised. The superposition effect of the two has exceeded the general expectation.

These tightening monetary policies are far more striking than before.

Even some central enterprises who have never worried about financing have begun to delay the upstream payment time, short for 3 months, long for a year.

This forced the payment period of every industrial sector to be postponed.

But those small and medium enterprises with the most upstream industry chain, for example, some casting manufacturers.

Because the steel market is changing rapidly, sellers do not accept any form of delayed payment. The weakest enterprises become the capital carriers of the whole industry chain.

In addition to being hit by industrial dynamism, the downturn in the real estate industry, another key indicator of China's economy, has become very clear.

In the first four months of this year, investment in real estate development in the whole country increased by 34.3% over the same period last year, but the data of key cities are not optimistic. During the period of 3 and April, the growth rate of real estate development investment in Shanghai was only 11.3% and 11.4% over the same period last year, and the growth rate was significantly reduced by 18.2 and 20 percentage points respectively over the same period last year.

The direct reason for the slowdown in investment is that prices have begun to loosen. The Rosealea Yao, an analyst at Longzhou economic news, tracked the property data of nine cities in China and found that the prices of these cities fell by 4.9% in April compared with the same period last year.

It rose by 21.5% last year, up by about 10% in 2009.

The downturn in real estate is bound to drag down the whole economy, because the real estate industry accounts for 13% of China's GDP, while its total industrial chain investment accounts for nearly 1/4 of the total social investment.

What's more, real estate has stimulated the development of more than 50 related industries, including iron and steel, cement, infrastructure, building materials, and even home appliances and decoration.

The construction of indemnificatory housing, which was originally hoped for in real estate development and supply, has not reached the expectation, and the shortage of funds is the biggest obstacle.

Other reasons for slowing the economy also include the impact of Japan's earthquake on the supply chain and the expected impact of the electricity shortage on production.

In addition, the US economy has been worse than expected recently. The GDP growth rate in the US dropped from 3.1% in the fourth quarter to 1.8% in the first quarter.

In these 1.8% increments, 2/3 is the enterprise stock, rather than the consumption of consumers or other end buyers.

This means that the final sales growth rate is only 0.6%, and the actual quarterly growth rate is only 0.15%.

Similarly, the shadow of weak consumption and the European sovereign debt crisis seems to be hanging over the continent.

All of these have cast a shadow over China's exports.

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The tightening monetary policy that created this series of reactions is aimed at curbing inflation.

In the first quarter of this year, most research institutions predicted that inflation would peaked in the two quarter and began to fall in the three quarter.

But at the moment, the inflation situation is still grim.

The CPI in May hit a new high of 5.5% after the financial crisis.

Peng Wensheng, chief economist of CICC, believes that if the price of non food prices had not been suppressed well in June, or that food prices would continue to maintain a larger historical average, CPI could exceed 6% in June.

While the economy is slowing down and inflation is high, it is easy to associate with "stagflation" and "hard landing". However, apart from a few people who have long been watching the Chinese economy, the official views of almost all research institutions are: if the policy is too tight, there is a risk of a hard landing, but the probability of such a situation is very low.

Although the global strategist of faxing bank has issued a serious warning about the risks of China's economy, Yao Wei, a Chinese economist at the Bank of China, said that the strategy was mainly to analyze the risks of the global economy. The view of the Bank of China on the Chinese economy is that the Chinese economy is experiencing a cooling down, but the risk of a hard landing is still controllable.

"In the next five years, China's macroeconomic policy will face major challenges, and the trade-off between inflation and growth will be several times more difficult than in the past ten years.

Therefore, it is more likely that there will be a series of turbulent short cycles, not a smooth soft landing, or a runaway hard landing.

Yao Wei said.

The Commission believes that the current economic slowdown is in line with the expectations and needs of policy regulation and needs to fall back in future price levels; some enterprises feel the pressure to increase in the process, and the cost of controlling inflation.

"When the economy showed signs of slowing down last year, some people called for easing the macro policy, which delayed the timing of inflation control."

Lu commented that the future policy is not necessary to continue to vigorously tighten up, but it does not need to relax. What is more needed is "continue to maintain neutrality and consolidate the effect of regulation and control". What the Chinese economy needs is to enter the normal state of "not too warm".

Like a high-speed locomotive running hot, China's economy needs to go smoothly.