Stagflation Worries Remain &Nbsp; Macro Policy In The Second Half Should Be Fine Tuned.

GDP growth slowed slightly in the two quarter, and micro economic entities

China Securities Journal: train accident makes the market anticipate that the construction of high speed rail may slow down.

On the 27 day, the executive meeting of the State Council decided to comprehensively strengthen production safety in the areas of pportation, coal mines, construction and hazardous chemicals.

What will this impact on our economy?

Wang Jian: Recently, the investment adjustment of high speed railway and wind power industry is not related to the problems. It can not represent the trend. This kind of new industry is not the main investment.

At present, there is no sign of shrinking investment scale and lowering total investment demand.

But investment is slowing down.

Last year, fixed asset investment increased by 23.8% over the same period last year, and the growth rate was 25.6% in the first half of this year.

Two indicators reflecting current and future investment demand have been slipped. First, the total investment in construction projects refers to the total investment required for construction projects currently under construction, and the total investment growth rate of construction projects last year was 26.8%. This year, the total investment is obviously reduced, and the end of 6 will be reduced to 19.6% at the end of this month.

The two is the total investment in new projects, which fell to 14.9% at the end of 6 this year.

If PPI represents the investment price index, the growth rate will be 7.1% in June. After deducting the price factors, the total investment growth of the new projects will be around 7%.

Fan Jianping: the trend of investment deceleration in the second half of this year is obvious.

First, local government led investment is slowing down.

The financial market has experienced difficulties in issuing local bonds and city investment bonds. On the aspect of bank loans, the CBRC has made clear that platform loan control increment and stock elimination, which means that local investment projects encounter capital bottlenecks.

Second, as the market interest rate rises, the availability of loans is reduced and corporate investment is slowing down.

China Securities Journal: in the two quarter, GDP grew by 9.5% year-on-year, a slight slowdown of 0.2 percentage points over the first quarter, and HSBC PMI fell below 50% in July.

However, the growth rate of industry and consumption rebounded in June.

From these data, whether the economic slowdown trend is established, will there be a "hard landing"?

Wang Jian: after tracking the monthly data for many years, I think that the rebound of industrial growth in June should be seasonal change, and it is likely to continue to decline in July.

In June, PMI was 50.9%, declining for three consecutive months, as a leading indicator of the macro-economy. This indicates that the economic demand in the three quarter will continue to decline, and the trend of economic slowdown has been established.

I predict that China's economy will enter a downward period of three consecutive years starting this year. This year's economic growth will be 9%, and next year it may drop to 8%, and then it will drop to 7% or even lower next year.

Besides the decline in investment, the growth of consumer demand is not optimistic.

The income distribution mechanism has not yet been improved, so there is no hope for this year's economic turn to be dominated by consumption demand and expansion of domestic demand.

In terms of exports, export growth has continued to decline recently.

Export growth slowed to 17.9% in June, declining for 4 consecutive months. After deducting the export price rising factor, the actual growth rate is obviously lower than that of GDP growth.

In addition, the spread of the European debt crisis and the dim employment data in the US mean that China's international trade environment will become more complex in the future.

Fan Jianping: because China's economic cycle and investment cycle are highly related, investment deceleration will have an impact on economic growth. In the two quarter, GDP growth has dropped slightly, to the three or four quarter, the economic deceleration will be more obvious.

At present, the "hard landing" of the economy is unlikely.

If the world economy continues to recover moderately, then the deceleration rate of China's economy will be limited.

Foreign trade will not suffer negative growth during the financial crisis. The export growth rate in the second half of this year will probably drop to 15%-16%, and it will remain at 20% level throughout the whole year. The growth rate of fixed asset investment in China will be reduced to 17%-18% in the second half of the year, and will remain at around 20% for the whole year. The annual GDP growth rate is expected to remain above 9%.

Stagflation still needs to be fine-tuning.

China Securities Daily: the meeting of the Central Political Bureau recently made it clear that we must insist on stabilizing the general price level as the primary task of macroeconomic regulation and control.

At present, the market expects the CPI increase in the second half of this year will gradually drop, but it will be at a high level for a long time. How do we view the price trend in the second half?

Fan Jianping: the price of pork has dropped. The CPI increase is unlikely to be high in the second half of the year.

The CPI increase in the three quarter may reach 5.8%, and the fourth quarter will fall to 5%.

However, the price drop will be limited and prices will remain high. Therefore, the basis of controlling prices as a top priority has not changed.

At the same time, the State Council is clear that it is necessary to reduce the price increase and not to cause big fluctuations in economic growth.

It should be noted that an appropriate slowdown in the economy is conducive to price control, but we must strive to achieve it with a smaller economic cost. While controlling prices, we will consider maintaining the economic slowdown within the limits of affordability.

Wang Jian: whether the CPI increase in June is a high point in the year is still hard to decide.

I expect CPI growth to decline significantly in August and September, but the monthly data in the four quarter may still exceed 7%.

The driving force in the current round of rising inflation is the rise in food prices. Food prices rose 11.8% in the first half of this year, more than double the CPI growth rate.

This year's agricultural production situation is droughts and floods, and autumn harvest is still to be observed.

If the autumn grain production is reduced, then the food driven inflation process will continue in the three or four quarter, especially when the autumn grain is listed in November, CPI will break 7.

China Securities Daily: how can macroeconomic control policies find a balance between price control and economic growth?

Fan Jianping: regulation is going on in the half way. We need to make the policy return to normal from the positive expansion as soon as possible.

After the financial crisis, the monetary and fiscal stimulus policies we just adopted have just dropped out of half: monetary policy has turned to sound policy, fiscal policy is still playing a role in areas other than real estate and automobiles, and the ten industry revitalization plan investment will not be completed until the end of this year.

Taking into account economic stability, in the process of exit, we should be cautious and slow to turn cautiously, and the intensity and rhythm of policies should be properly adjusted.

Monetary policy has maintained a high frequency operation from the fourth quarter of last year to the first half of this year. However, because the lag period of monetary policy is usually three to four quarters, that is to say, the effect of monetary policy in the fourth quarter of this year will be very obvious.

We need patience to observe.

Therefore, the next step is not to blindly move monetary policy, but also to reduce operation frequency and prevent overshoot.

Fiscal policy should maintain a high income and high investment situation and play a positive role in "shielding" the withdrawal of monetary policy.

Wang Jian: tight money can not cure current inflation, and continuing to raise interest rates will stifle economic growth.

Therefore, monetary policy should turn to growth, while fiscal policy should aim at anti inflation and turn to stability.

Monetary policy can not cope with inflation caused by rising food prices, so I oppose the use of interest rate policy to combat inflation.

At present, we should change the means of controlling inflation and turn to fiscal policy, such as linking fiscal subsidies to inflation rates and implementing anti inflation subsidies for middle and low income groups.

In terms of economic growth, China's economy needs to be reversed by investment and export. The new investment demand is becoming weaker and weaker.

This involves the reform of the income distribution mechanism.

In China's economic restructuring, urbanization is also a force to create demand, but whether it is the reform of income distribution or urbanization, it depends on long-term solutions to some major structural problems.

If this path is crossed, China's economy will be expected to move towards a new long-term and high-speed growth path led by domestic demand.

China Securities Journal: in the future, China's economy may enter the economic cycle of "low growth and high inflation". How to deal with macroeconomic regulation and control policies?

Fan Jianping: the business cycle is going on and on, and the positive coping with policy can shorten the cycle time.

The goal of macroeconomic regulation should be shifted from "comprehensive control of prices" to "keeping control".

In terms of "control", such as the real estate purchase policy in the two or three line cities, continue to lower housing prices, thereby reducing inflation and the economy.

In local government investment, local financing platform loans should be targeted to control and strictly control the impulse of local government investment.

In terms of "protection", we should continue to increase financial support in the fields of agriculture, rural areas, small and medium enterprises, technological innovation and energy conservation and emission reduction. We will solve the bottleneck of construction funds by supporting loans and supporting bond financing, and the export tax rebates of related industries need to be improved.