The Current Situation and Two Problems for the Operation of Macro-Economy

Oct.8th,2010       Visited:      Font Size: Big   Medium   Small

[Contents]

    Recent data from NBS show that our economy has gone out of the trap of global economic crisis and on the track of sustainable development with a firm foundation. Basically, economy growth can be kept at an ideal rate, however, the operating data of economy indicate that we are still lack of internal force to drive the growth of our economy. Confronting the two problems of development¡ªspeed and quality, the transformation of China¡¯s economy still has many more obstacles to clear away.
    The current situation can be described as below:
    Firstly, the domestic demand keeps healthy, which offers a very good internal environment for the growth of national economy. Fixed asset investment in cities and towns in August is 2113.2 billion yuan, which continuously keeps a good condition. The total fixed asset investment in cities and towns from January to August reached 14099.8 billion yuan, rose by 24.8%, year-on-year, which is a formal situation. The total retail value of social consumption goods from January to August amounted to 9749.2 billion, gained 18.2%, compared to that of last year, indicating that domestic consumption keeps a steady growth.
    Secondly, the foreign demand basically keeps steady. The total volume of export from January to August 989.74 US dollars, gained more 5.4% than that of the same period of time in 2008, which is highest in history.
    Thirdly, monetary supply is continuously and steadily increasing. The newly-added bank loan in August reached 545.2 billion yuan, which increased in the past four months. While the total volume of loan from January to August is amounted to 5695.5 billion which accounts for 75.94% of all-the- year loan,7.5 trillion. Given that no special situation occurs ,there is no more controls should be taken in the rest of the year.
    Fourthly, range of goods price is too large, but the possibility for further growth is low.CPI in August reached 3.5%,the average level of CPI from January to August is 2.8%,which approaches to the control objective in this year. The reason for August so high CPI mainly lies in the rise of agricultural and sideline product price and the influence of weather. When it comes to September, the pressure for rise of price was relieved. PPI constantly went down from may, which also played an active role in controlling CPI.
    Fifthly, government's fiscal revenue turns to down, making the development problems noticed. The government's fiscal revenue in August totally summed to 561.9 billion yuan, decreased by 27.81% on a month-on-month basis, which is the second lowest in the past 8 months. The reason why the growth of government's fiscal revenue slows down is complex. On one hand, the corporate income tax decreased 46.4% while the business tax gained only 11.7%, if it were not for the help of the change of import and export situation, the fiscal situation would be much worse.
    Macro-Economy: Neither pessimistic Nor optimistic
    The current situation or problems are how to keep the economy develop not only rapidly but also with high quality. But it seems contradictory to balance these two goals in current China.We have to make hard choice for the most part.For example,the current price of real estate is too high to burden for the people in the street,on one hand,we have to control the price,but on the other hand, real estate industry links to so many industries which can influence the operation of the macro-economy.Once the price decreased dramatically, shocks will come into being in many industries,and then,maybe it will lead to the outcome of economic bubble.Afterwards,the growth of China¡¯s economy will slow down,and more people will lose their jobs and more companies will be closed.This is the problems related to development speed and quality.
    Another example is about the control of rate.currently,CPI goes high,3.5% in August.That is a premonition of inflation.We should not only keep the CPI in a low level but also drive the economy to develop quickly.But we are still in a trap to make a chioce.
    The last example is about saving energy and reducing emissions during developing our economy. In the long run, we, not only China,but also the entire world must enforce the strategy.However,enforcing this stategy will influence the growth of the economy in short term.Substantially,it is still the contradiction between speed and quality for development.
    If we summarize the contents above,we,China Economy Network Consulting Co.,Ltd,believes that China¡¯s economy will continuously develop moderately In.the near future,1 year or so.Generally speaking, the situation of the economy in the future is neither pessimistic nor optimistic,and the core mission for the central government is to restructure the national economy.
     
    China Economy Network Consulting Co.,Ltd
    By Rock
    Sep. 2010