China’s Q1 Economy:Slow yet Stable

开篇：润墨网以专业的文秘视角，为您筛选了一篇China’s Q1 Economy:Slow yet Stable范文，如需获取更多写作素材，在线客服老师一对一协助。欢迎您的阅读与分享！

china’s GDP grew 7.4% year on year in the first quarter of 2014. Does the market believe it？

According to the data from China’s National Bureau of Statistics （NBS）， the GDP of China in q1， 2014 reached 12821.3 billion yuan， up 7.4% from a year before. Even though the GDP growth rate was 0.3 percent lower than the 7.7% figure last year and lower than the expected 7.5% growth of this year， it is still higher than the market expects.

On the same day when the data was published， China’s State Council held a conference of regular affairs， in which the decision-makers decided to lower the reserve requirements for qualified commercial banks and banking cooperatives in rural areas and counties. A measure that is interpreted as “micro stimulus” triggered a lot of guesses from the market.

For the current situation， someone close to the decision-makers said that some market analysis has contained the concerns over the GDP growth， which was gradually slowed as of last year， but the outsiders should get used to this slower yet stronger growth. The economists generally believe that the 7%-8% economic growth rate is going to be a normal thing in China. Presently， the most important thing is to solve the indepth problems accumulated in the past years of development.

“Everyone needs to change their mindset and concept to look at the new period and upcoming changes of Chinese economy，” said Sheng Laiyun， spokesman for the NBS. “This is not exclusive to China， but a period that any big countries in the world must go through during their development. The Chinese government positively put forward a series of political goals for the requirements of this new period.”

In his opinion， China has undergone apparent changes recently. “These changes may not be sensed in a short while， but when you look back five or ten years later， you will see how great these changes actually are.”

Indicated Stability

Along with the slower GDP growth， the major macroeconomic indexes all saw the decrease in the first quarter of 2014.

The fixed assets investment， which is dubbed the “engine” for the robust economy， had its growth rate drop to 17.6% in Q1. The industrial valueadded above average increased by 8.7% in that quarter by the comparable price， 0.8 percent lower than a year before. The total retail volume of the social consumer goods totaled 6208.1 billion yuan， down 12.0% year on year.

The PMI and exports & imports data which was published at the beginning of April was disappointing as well. Liu Ligang， chief economist of ANZ Bank Greater China， thought that the monthly economic indexes might prove the authenticity of the expected 7.2%-7.3% growth rate， but actually the economic growth has been greatly slowed. The relevant governmental departments have realized that the slowdown of economic growth is more serious than expected.

The market’s concerns over the economic slowdown are also concentrated on some specific fields， such as the real estate.

In the first quarter of 2014， the real estate developers invested 1533.9 billion yuan with the nominal growth rate of 16.8% year on year. This growth rate is lower than pervious years. The sales amount of commercial buildings totaled 1326.3 billion yuan， down 5.2% year on year. The sales amount of residential houses dropped 7.7%. The poor performance matched the descriptions in the analysis that the excessive investment in the real estate is the major source of risks in 2014 and 2015.

However， the governmental source confirmed that the situation is still controllable.

As for the exports and imports data that overseas markets pay close attention to， Sheng Laiyun said that the existence of the trade in specially regulated zone created incomparable fac- tors in the trade in some regions. With these factors removed， the exports and imports of China should be better than the data shows.

Meanwhile， he recommended the analysts to watch the value of export delivery of industrial enterprises above the average level published by the NBS. This figure takes around 85% of the general export of China. In the first quarter of 2014， this part saw the 4.2% year-on-year growth. Even though the growth was slower than a year before， the positive growth still lingers.

The data about employment and income are encouraging. According to NBS， there are more 3 million urban citizens finding jobs in the first quarter of 2014， showing the mildly improved employment situation. The increase of the actual income of urban and rural citizens respectively hit 7.2% and 10.1%， higher than a year before.

Meanwhile， the proportion of service in the national economy remained higher than the industry， a trend started and continued last year. The growth rate of the service was 0.5% higher than the industry and its proportion in GDP was 4.1 percent higher than that of industry. In addition， the driving force of consumption greatly improved as the final consumer spending takes 64.9% of the GDP， 1.1 percent higher than a year before.

“The economic development in Q1 could be better than expected thanks to the new changes to the economic structure. The apparently increased proportion of service means a stronger driving force of this sector for the employment and development，” said Zhang Liqun， a fellow from State Council’s Research Development Center. In his opinion， the current economic development is more dependent on service and con-sumption， thus becoming more stable than expected.

Hu Chi， a fellow from the research center of the State-owned Assets Supervision and Administration Commission， said that to keep the stable growth was to keep the employment rate from falling and ultimately to serve for keeping people’s livelihood. The indexes about employment and income could prove that the general situation in Q1 was good and the economic growth rate was still above the bottom line fixed by the government. Therefore， it is unlikely to have the grand stimulus measures now.

Though some analysis reported that the economic growth rate of China would be slowed to 7.1% in the second quarter， many analysts and experts believe that China’s economy would turn better in the second half of this year considering the V-shaped development pattern of Chinese economy in the past two years.

Think of Chinese Economy in the Long Term

It has been three years for Chinese economy to lose double-digit annual growth rate since 2011， meaning that the long period of the economic development has already been in the down channel. There， the 7.4% economic growth rate in the first quarter did not surprise some experts.

What caused the slowdown in economic growth listed by Sheng Laiyun are the long-term factors： the still complicated external environment for Chinese economy， the economic structure change China is going through and the active regulation of the government.

“The slowed economic development reflects the fact that Chinese economy has already stepped into a new development period. After over 30 years’ double-digit growth rate， the Chinese economy is actually in a new period that features transformation，” Sheng Laiyun said in the press conference. “Presently， there might be some changes to the external conditions and internal factors. For example， the supply-demand relation of labor force has been changed along with the increasing restrictions from the environmental conditions and resources. All these factor lead to the lower potential economic growth rate of the Chinese economy. （The lower growth rate） meets the objective requirement as we are no longer able to keep the double-digit growth rate like we did in the past.”After three years of slower economic development， the economic growth rate is getting closer to the potential growth rate despite the shortterm volatility. It is an obvious sign that the economic development is going to be slow yet stable， a typical feature of the economic structural change.

He explained to those present in the press conference that there have been major economic changes to the Chinese economy： the faster shift of investment-driven economy to consumer-driven economy， the faster change of industry-based economy to servicebased economy， the change of Chinese government’s goal from being focused on economic growth rate to a more scientific and reasonable pattern. Therefore， the Chinese government is more tolerant towards the lower economic growth rate， which is also a sign of the perfect understanding of the current economic situation and conditions.

Traditional Regulation No Longer Feasible

With the strategic thinking in the long term， the society should also refresh their understanding of the gov-ernmental regulation.

Since the employment rate is a lagging indicator and needs time to judge whether it hits the bottom or not. In addition， the government has already accelerated the pace of approving the projects of grid， railway and infrastructure. The market still expects the governmental interference. Driven by the concept of “micro stimulus”， many investment institutions have accelerated their distributions in this country.

Some governmental officials， however， said that the current economic development features the slower growth， meaning that the governmental interference should not only target pushing the GDP growth rate up； instead， it needs to shift to diversified goals. Therefore， the policies are fixed and implemented based on this goal. The current policies not only focus on the present situation， but also put the future into consideration. People’s livelihood will take an important part and more measures are needed to offset the shortages in the past. Therefore， the present policies are different from the previous ones from the perspectives of goal， key points and force of implementation.

Li Huiyong， chief macroeconomic analyst of Shenyin & Wanguo， said that the goal of “keeping stable growth”in the current period has three different points from the past goal with the same time： firstly， some of the previous measures were short-lived and did not go through enough preparation before being implemented， and today’s are planned in advance； secondly， the shortterm initiatives and long-term goals are really combined together； thirdly， the government and market are more united as a single force the government is not fighting alone for it is more focused on bringing about the social initiative to keep the economic stability.

Against that background， the decision-makers of China proposed the increase of the investment into agriculture as the reserve requirement for commercial banks and banking cooperatives in rural areas and counties is lowered. Several experts said that this measure， as well as the other measures， can be called“micro stimulus packages”， but their primary targets are still the “structural changes” and “offsetting the shortages”.

The slowed economic growth rate reflects the fact that Chinese economy has already stepped into a new development period said Guan Youqing， deputy director of Minsheng Securities Institute. In his opinion， the economic growth of China is still staying in the reasonable range. If the quantitative easing is implemented， the debt ratio and leverage ratio will be increased. It is an old routine of economic stimulus that the government will not embark on.

But the “7-trillion stimulus package by local governments” reported by media still triggered the controversy in the market.

“Some local authorities still followed the outdated idea to boost the economic growth. They are waiting for the eased policy from the central government， which does not tally with the central government’s requirements of structural change and pattern alteration. Therefore， under the current guideline of focusing on quality and caring about the future， what remains a problem is not how to take measures， but to change the mindset related to taking measures，”said Hu Chi.