The Cold Thinking Of Local Economy After "Growing Up"

Under the guidance of the banner of wide fiscal policy, the provincial economy seems to have taken a shot.

With the release of macroeconomic data in the first half of the year, all localities have displayed their semi annual reports.

At present, the public information shows that more than 10 provinces have disclosed the local GDP growth rate or the expected growth rate in the first half of the year.

Except Beijing, the economic growth rates of all provinces are higher than the national average of 9.6%, even far exceeding expectations.

In the case of high inflation and tight money, the provinces can still give a nearly perfect answer, which is indeed gratifying.

The whole nation is like taking a reassurance.

China's annual economic growth target of 9% has become tentacle.

The pessimism of China's hard landing has also been mixed up.

But with a careful analysis of the causes of economic growth in every province, the surprise will become a cold sweat.

Consumer horse racing slowly

From all the statistics, we can see that the most important driving force for economic growth is economic growth.

Take Fujian Province as an example, the total retail sales of social consumer goods increased by 18%, down from 18.9% in 2010, but its social fixed assets investment was 1.3 percentage points higher than that in 2010.

The same is true in Jiangxi, in Jiangxi.

"This trend of stimulating economic growth is not in line with the general direction of China's economic development."

Li Hao, a macroeconomic researcher at the national think tank, Ampang consulting, told China Daily News that in recent years, the state has always stressed that it is necessary to shift from over reliance on investment to boosting domestic demand by boosting domestic demand.

But this change is not obvious everywhere.

In Li Hao's view, the slow pace of consumer horse drawn carriages is due to the lack of money in the hands of ordinary people.

Although all localities have been raising the minimum wage for workers, the minimum wage is not equal to the average wage, and the purchasing power of residents has increased by a limited margin.

It can be seen from the semi annual report that the per capita gross income of our residents is not too high, and the price deduction factor is basically the same as that of 2010.

So how can we make our consumer horse racing fast?

Ma Yuan, a macroeconomic researcher of CIC consultant, told China Daily News reporters that the slow pace of China's consumer horse racing is mainly due to the lack of local government's attention.

They overly rely on fixed assets investment to stimulate economic development and ignore social consumption.

Li Hao suggested that China should adjust the whole fiscal expenditure structure.

Shift fiscal expenditure from fixed asset investment to people's livelihood and social security.

"A large amount of financial investment into fixed assets investment is like sending blood to a seriously ill patient. It can only solve the pain of a time and can not solve the disease of the world.

The real recipe should be to create the ability of self hematopoiesis for our economy.

Fixed asset investment triggering inflation

Fixed assets investment hindered the pace of consumption carriage, but also increased the pressure of inflation in China.

China's monetary tightening policy is not as influential as western countries.

Under the guidance of the banner of wide fiscal policy, the investment of state-owned enterprises and local governments has been at a loose state.

This part of the funds will eventually be reflected in the market.

"Expanding investment in fixed assets will increase demand for raw materials such as cement and steel, which will lead to higher prices of raw materials and higher pport links.

At the same time, the expansion of fixed assets will lead to an increase in land leasing fees, and the development of new houses will further raise the prices of raw materials.

This continuous cycle leads to a large number of currencies flowing into the community from the state treasury, loans and deposits, leading to inflation.

Ma Yao said.

Li Hao also pointed out that loose fiscal policy has dragged down the effect of China's monetary tightening policy.

He Keng, deputy director of the finance and Economic Commission of the people's Congress, also expressed similar views in public.

He said that our finances must seriously reduce the scale of capital construction, reduce local government debt and tighten financial expenditure.

Only in this way can inflation slow down.

At the same time, our country also needs to set up a strict supervision mechanism to cool down the hot investment in fixed assets.

"To solve the overheated investment in local fixed assets, we need to intensify supervision. For example, some governments are eager to make achievements in projects, ignore the interests of vulnerable groups, and at the same time strengthen supervision at the same level."

Ma Yao said.