摘要：Liu Xiaoguang, Professor, Institute of National Development and Strategy, Renmin University of China, Key Member of CMF
Liu Xiaoguang, Professor, Institute of National Development and Strategy, Renmin University of China, Key Member of CMF
Speech at the 4th CMF International Seminar on Macroeconomics (BMW Headquarters,Munich, Germany）
number of Texts：2062 words
Viewing Time：27 minutes
As we all know that China’s economy has grown rapidly for more than four decades and become a key driver for the global economy for the last two decades. Additionally, we are aware that China's economy has experienced a slowdown in recent years, which is also a matter of concern. Therefore, I believe that in some ways, the role of economic experts and policymakers has become even more crucial for shaping the future of the economy.
My presentation here will be divided into three parts. First, I will analyze China's macroeconomic situation in the first three quarters of 2024. Second, I will discuss China's macro policy adjustments since last September. I will show you its impact on the economy in 2024 and 2025. Lastly, I will provide a forecast and outlook for China's economic growth in the next two years.
In the first part, we will talk about how is China’s macroeconomic going on in the last three quarters in 2024.
1. In 2024, China’s economy continued to maintain a medium-high growth rate, with the quarterly downward pressure increasing. In the first three quarters, China’s real GDP grew by 4.8% year on year; including 5.3% in the first quarter, 4.7% in the second quarter and 4.6% in the third quarter. It is indeed a downward pressure. But overall, it is still a medium term high growth rate.
2. In 2024, China's industry is relatively strong, while the service industry is relatively depressed, with real estate and construction as a drag on growth. For example, in the first three quarters, the industrial added value increased by 5.7% year on year, 1.5% points higher than the growth rate in 2023;mong them, the added value of manufacturing industry increased by 5.9% year on year, 1.5 percentage points higher than the growth rate in 2023. Despite the recent slowdown, industrial production is generally relatively strong.
The automobile manufacturing industry, especially the new energy vehicles, has grown very fast and continues to be a driving force for China’s economy. We can see that the production and sales of the new energy vehicles grew by more than 30 %, it's quite fast.
I believe that BMW should allocate more resources to the development and promotion of new energy vehicles in the Chinese market, as it remains a significant market. The data shows that the new energy sector has experienced a substantial growth of 30% to 35%, which is quite remarkable.
However, in the first three quarters, the value added of the service sector increased by 4.7% year on year, which is quite high but still relatively weak in the context of China’s economy. Among them, the value added of the real estate industry decreased by 4% year on year, it is a big drag on China’s economy. Along with the decline in real estate sector, the construction sector also decreased. It is still growing but the the growth rates declined. That is about the picture. And we can also tell from the table that the industry sector and the manufacturing industry increases, but the banking business decreases and the realty industry declines. That's the whole picture of the economy.
3. In 2024, China's foreign trade situation improved significantly, and the growth rate of both export and import rate picked up significantly. It is turning from the negative growth to positive growth. For all exports regions, including the ASEAN, the U.S., the EU and the rest of the world, all turned from negative growth to positive growth. So, in 2024, China’s trade improved significantly and profoundly in the world.
4. However, Domestic demand remains weak, and the growth rate of consumption and investment is low, restricting the unleash of economic growth potential. I want to point that excluding the real estate sector, the investment and the consumption are good. For example, in terms of investment, fixed asset investment only increased by 3.4% year on year, but excluding real estate investment, fixed asset investment grew 7.7% and private investment 6.4%. So the real estate sector becomes a big drag on the economy.
5. The real estate market continues to deeply adjust, causing great short-term downward pressure on all aspects. There are two economy scenarios in chart, one including the real estate sector, while the other one excluding the real estate sector. We will see two different pictures and that's important for the economy.
Since the second half of 2021, the real estate market has begun to decline, and a series of indicators such as real estate investment and sales have experienced a sustained and serious contraction. So far, there has been no obvious turning point, which has become the focal point for the deterioration of a series of macro indicators such as investment, consumption, financial credit and local finance.
From the perspective of the completed amount of real estate development investment, it decreased by 10% in 2022,9.6% in 2023,10.1%, 26.9%, compared to 2021; from the source of real estate development funds, 25.9% in 2022,13.6% in 2023 and 48.9% compared to 2021.
From the perspective of commercial housing sales, it decreased by 26.7% in 2022, 6.5% in 2023, and 22.7% in 2021; from the sales area of commercial housing, 24.3% in 2022,8.5%, 17.1% from January to September in 2024, and 43.2% compared to 2021.
In terms of new construction area, it decreased by 11.4% in 2021,39.4% in 2022,20.4% in 2023 in 2023,22.2% in 2024,11,1.1% in 2010,15.5% in 2021 and 53.4% in 2022, up to 2022,65.5% compared to 2018.
6. In 2024, prices in China will remain low and the macro economy is at the bottom of the economic cycle. We can see in the first picture, CPI rose 0.3% year on year.
I think it's quite different in here and in the U.S., and core CPI was 0.1% while PPI decreased by 2.0% year on year. The GDP deflator decreased by 0.7% year on year in the first quarter, indicating that the current Chinese economy is still at the bottom of the cycle, but showing signs of recovery.
7. The overall employment situation was stable, the unemployment rate fell, and the growth of household disposable income improved. According to the surveyed urban unemployment rate index, household employment has basically recovered. In the first three quarters of the year, the average surveyed urban unemployment rate was 5.1 percent, 0.2 percentage points lower than the same period of last year. In September, the surveyed urban unemployment rate stood at 5.1 percent, down 0.2 percentage points from the previous month. At the end of the third quarter, the total number of rural migrant workers was 190.14 million, up 1.3% year on year.
The growth rate of household disposable income has stabilized and picked up, higher than the economic growth rate. In the first three quarters, the nominal per capita disposable income increased by 5.2% year on year, 1.1 percentage points higher than the nominal GDP growth, and 4.9%, 0.1 percentage points higher than the real GDP growth.
8. The economic cycle speed continues to recover, and the passenger volume and freight volume return to the normal level. Since 2024, passenger volume and freight volume have improved significantly, and finally returned to the normal level from May. In 2023, it has not fully recovered, but it can be said that in 2024, the passenger flow and cargo flow will finally return to the normal level and maintain a steady year-on-year growth rate, which is an important symbol of the normalization of China's economic cycle.
For the second part, we will talk about China’s recent economic policy adjustment and impact since last September. On September 24th, the Central Bank, the CSRC and the State Administration of Financial Regulation took the lead in introducing incremental monetary policies. It lowering the Reserve Requirement Ratio (RRR) and Policy Rates, reducing Existing Mortgage Interest Rates and unifying Minimum Down Payment Ratios, and creating New Monetary Policy Tools to support the stability of the Stock Market.
On September 26th, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation, adjusting macro policies. The macro policies should be vigorous, strengthened, and take a combination of policies, and clearly stated that we need to "implement existing policies and launch incremental policies". This is a highly significant meeting in China. It is a comparison of the current meeting with two previous ones, one held in April 2023 and the other in July 2024.
Then on October 8th, after the Chinese National Day breaks from October 1st to 7th, the first day after the vacation, the National Development and Reform Commission has further launched a package of incremental policies. On October 12th, the Ministry of Finance launched a package of fiscal incremental policies. On October 17th, the Ministry of Housing and Urban-Rural Development launched the real estate increment policy. All the important ministries launched new packages of incremental policies.
Because it is only one month from the policy-launching. We can only make a preliminary impact analysis on the economic policy adjustment. We can see that some production and demand indicators began to show signs of improvement, market expectations improved, and positive factors driving the economic recovery increased significantly. It is mainly manifested in six aspects:
First, there is a strong rebound in Chinas stock market. As of October 21, all the stock market indexes rose dramatically. For example, the Shanghai Composite Index rebounding by more than 20%; the Shenzhen Composite Index rebounding by more than 30%; some small indexes rebounded by more than 50% and 100% respectively within only 20 days.
Second, the growth rate of infrastructure investment has rebounded sharply. In September, infrastructure investment grew by 17.5% year on year.
Third, consumption growth has rebounded at a low level. In September, total retail sales of consumer goods grew by 3.2% year on year, up 1.1 % points from August.
Fourth, industrial growth has stabilized and picked up. In September, the industrial added value grew by 5.4% year on year, up 0.9% points from the previous month.
Fifth, growth in the service sector has stabilized and picked up. In September, the service sector production index rose 5.1% year on year, 0.5% points faster than the previous month.
Sixth, the surveyed urban unemployment rate has decreased slightly. In September, the surveyed urban unemployment rate was 5.1%, down 0.2 percentage points from the previous month. I think it is a normal level for the China’s economy now.
For the third part, it is a forecast and outlook for China’s economic growth in 2024 and 2025.
I think in the first three quarters of 2024, China’s economy has achieved the expected growth, and the fourth quarter will continue the recovery trend of "moving forward" in twists and turns. With the implementation of this round of policies, it is expected that the economic growth rate is expected to stabilize and pick up in the fourth quarter, reaching 4.7% -5.3%, and the annual economic growth rate is expected to reach 4.8% -5%.
Looking ahead to 2025, with the introduction of macro-policy adjustment and the comprehensive deepening reform plan, we will work together to form an internal driving force for economic recovery and development, and transform Chinas economy from recovery growth to regular expansion.
Here is a number forecast, we provide three scenarios here.
Under the benchmark scenario, Chinas economy has further recovered and its macro policies have improved, with the economy expected to grow by 4.9% in 2024 and continue to grow by 5% in 2025. Under the optimistic scenario, the real estate market has stopped falling and stabilized, and the reform measures have brought new impetus. The economy is expected to grow by 5.0% in 2024 and about 5% in 2025. However, there is another scenario we don’t want it to happen, under the pessimistic scenario, the real estate market is not as expected, reform measures have not been positively reacted, the economy is expected to grow by 4.8% in 2024 and maybe grow by 4.5% in 2025.
I think the Chinese government now has been working very hard to make that the economy grows in the benchmark scenario or even the optimistic scenario.
The article is for academic exchange only and does not represent the position of CMF.
来源：中国宏观经济论坛CMF
