Outlook for China’s Economic Operation in 2020
The Central Economic Work Conference held in December 2019 emphasized the need to innovate and improve macro-control, implement proactive fiscal policies and prudent monetary policies, improve economic policy coordination mechanisms, and maintain economic operations within a reasonable range. The meeting pointed out that to achieve the expected goals for 2020, “we must adhere to the principle of stability, adhere to the policy framework of macro-policy, micro-policy, and social policy, so as to improve the forward-looking, targeted, and effective macro-control. Be proactive, adhere to problem-oriented, goal-oriented, and result-oriented, and continue to work hard on deepening supply-side structural reforms to ensure that the economy achieves a reasonable growth in volume and a steady improvement in quality.” This provides an important point for judging China’s economic performance in 2020. Policy basis.
From the forecast of world economic growth. In January 2020, the “Global Economic Outlook” released the World Bank’s forecast: In 2020, China’s economy will grow by 5.9%, which is 0.2% lower than the actual growth rate in 2019; the US economy will grow by 1.8%, which is lower than the actual growth rate in 2019. 0.5 percentage point; the euro zone economy grew by 1.0%, which is 0.1 percentage point lower than the actual growth rate in 2019 (World Bank, 2020). The United States and the Eurozone are China’s two major trading partners, and changes in their economic growth will have an important impact on China’s economic growth.
Starting from China’s economic performance in recent years and the clear policy requirements of the Central Economic Work Conference, taking into account the impact of the major public health emergency COVID-19 and the economic growth trends of major countries and regions in the world, a preliminary judgment is that 2020 The growth rate of China’s economy may slow down from 2019. Among them, the economic growth rate in the first quarter will be significantly lower than that of the same period in 2019, the second quarter will be significantly higher than the first quarter, the third quarter will continue to rise, and the fourth quarter will stabilize, which is the opposite of the trend of economic growth decline in 2019; the whole country; The per capita disposable income of residents, the total profit of industrial enterprises above designated size, and the growth rate of national general public budget revenue may all fall back from 2019.
(1) Looking forward to economic growth in 2020 from a production perspective
From the perspective of production, this article judges the economic growth in 2020 from two aspects: The first aspect is the new kinetic energy of the new economy. It has been pointed out earlier that in 2019, the new economy and new momentum will maintain rapid growth, which has played an important role in slowing down the downward pressure on traditional economic growth and maintaining stable economic growth. In December 2019, the Central Economic Work Conference pointed out: “We must support the development of strategic industries and increase investment in equipment renewal and technological transformation.” “To vigorously develop the digital economy, we must rely more on market mechanisms and modern technological innovation to promote the development of the service industry. The producer service industry extends towards specialization and the high end of the value chain, and promotes the upgrading of the life service industry to high quality and diversification.” “We must focus on the country’s long-term development, strengthen network-based infrastructure construction,” “steadily advance the construction of communication networks,” and “accelerate” Implement regional development strategies, improve regional policies and spatial layout, give full play to the comparative advantages of various regions, and build a new source of power for high-quality development across the country. “Create a world-class innovation platform and growth pole.” It can be expected that, driven by the relevant innovation-driven policies, the new economic and new kinetic energy will continue to maintain rapid growth in 2020.
The second aspect is traditional economy. There is still greater downward pressure on the traditional economic growth rate, which has a greater impact on the overall economic growth rate. The Central Economic Work Conference in December 2019 pointed out: “We must improve and strengthen the’six stability’ measures, and improve the coordination and implementation mechanism of fiscal, currency, employment and other policies to ensure that the economy operates within a reasonable range. It is necessary to consolidate and expand tax cuts and fee reductions. Effectively, we should vigorously optimize the structure of fiscal expenditures, further alleviate the problem of difficult and expensive financing for enterprises, and take multiple measures to maintain a stable employment situation. We must rely on reforms to optimize the business environment, deepen streamlining of administration, decentralization, decentralization, integration of management, and optimization of services.” “We must promote entities. Economic development will improve the level of manufacturing.” The above series of policy measures will play a role in slowing down the downward pressure on traditional economic growth.
(2) Looking forward to economic growth in 2020 from the perspective of demand
The Central Economic Work Conference in December 2019 pointed out: “We must strengthen people’s livelihood orientation, promote steady growth in consumption, effectively increase effective investment, and release the potential of domestic market demand.” “Promote the “dual upgrade” of industry and consumption, and fully tap the advantages of the super-large-scale market. The basic role of consumption and the key role of investment” “we must promote a higher level of opening to the outside world and maintain the steady growth of foreign trade.” Judging from the demand perspective, in 2020, the growth rate of consumer demand may be lower than that in 2019, and the decline is limited; the growth rate of investment demand is roughly the same as in 2019; the growth rate of net export demand has fallen.
Consumer demand accounts for a large proportion of all consumer demand, and the trend of consumer demand growth largely determines the trend of consumer demand growth. Changes in the growth rate of residents’ disposable income have a greater impact on the changes in the growth rate of residents’ consumption demand. Judging from the situation in recent years, the increase in the national per capita disposable income in the previous year tends to drive the increase in the consumption demand of residents in the following year; the decline in the growth rate of the national per capita disposable income in the previous year will often drive the residents in the following year. The growth rate of consumer demand has fallen. It can be seen from the first part of this article that the nominal growth rate of national per capita disposable income in 2019 accelerated by 0.2 percentage points compared with 2018, and the actual growth rate was 0.7 percentage points lower than that in 2018. At the same time, according to the policy requirements of the Central Economic Work Conference in December 2019 to promote stable growth of consumption and release the potential of domestic market demand, preliminary judgments indicate that the growth rate of consumer demand in 2020 may be lower than that in 2019, but the decline is limited.
As mentioned above, in 2019, the growth rate of infrastructure investment remained at a low level, which had a downward effect on the growth rate of fixed asset investment. The obvious rebound in the growth rate of state-controlled investment played an important role in stabilizing the growth rate of fixed asset investment in 2019. . The Central Economic Work Conference in December 2019 pointed out: “We must focus on the long-term development of the country, strengthen strategic and network-based infrastructure construction, promote the construction of major projects such as the Sichuan-Tibet Railway, steadily promote the construction of communication networks, and accelerate the implementation of major natural disaster prevention and control projects. Strengthen the construction of municipal pipeline networks, urban parking lots, cold chain logistics, etc., speed up the construction of rural roads, information, water conservancy and other facilities. It is necessary to speed up the implementation of regional development strategies, improve regional policies and spatial layout, give full play to the comparative advantages of various regions, and build high-quality development across the country Promote the coordinated development of the Beijing-Tianjin-Hebei region, the integrated development of the Yangtze River Delta, and the construction of the Guangdong-Hong Kong-Macao Greater Bay Area to create a world-class innovation platform and growth pole. It is necessary to solidly promote the construction of the Xiongan New Area and implement the Yangtze River Economic Belt to protect the Yangtze River Economic Belt. Measures to promote ecological protection and high-quality development in the Yellow River Basin. It is necessary to improve the comprehensive carrying capacity of central cities and urban agglomerations.” Based on this judgment, the growth rate of infrastructure investment will pick up in 2020, and state-controlled investment will maintain its growth momentum. It will play an important role in stabilizing the growth rate of fixed asset investment in 2020.
The Central Economic Work Conference in December 2019 pointed out: “Opening to the outside world should continue to go in a larger, broader, and deeper direction, strengthen the promotion and protection of foreign investment, and continue to reduce the negative list of foreign investment. Promote the steady increase of foreign trade. It is necessary to guide enterprises to develop diversified export markets. The overall level of tariffs must be lowered. The free trade pilot zone will play a role as a pilot field for reform and opening up, promote the construction of Hainan free trade port, and improve the investment policy and service system of the “Belt and Road”.” The series of policies mentioned above Requirements play an important role in stabilizing the export of goods and services.
(3) Looking ahead to economic growth in 2020 from the perspective of the impact of COVID-19
At the beginning of the new year, COVID-19 broke out in Wuhan and spread widely. It has a great impact on production and people’s lives across the country. The impact on economic growth in 2020 cannot be ignored. However, as COVID-19 is still ongoing, it is still difficult to accurately determine its impact on economic growth. Most of the existing studies refer to the impact of atypical pneumonia on economic growth in 2003 to judge the impact of COVID-19 on economic growth in 2020. The impact of atypical pneumonia on economic growth in 2003 was mainly reflected in the second quarter. From the first to fourth quarters of 2003, China’s economic growth rate was 11.1%, 9.1%, 10%, and 10%, respectively. The economic growth rate in the second quarter was 1.5 percentage points lower than the average growth rate of the previous two quarters. According to a rough estimate of the proportion of GDP in the second quarter of 2002 to the GDP of the whole year, the decline in economic growth in the second quarter will have an impact on the economic growth rate of the whole year of 2003 by about 0.4%. Looking at the whole year, the tertiary industry was most affected by atypical pneumonia, and its added value increased by 9.5%, which was 1.0 percentage point slower than in 2002. According to a rough estimate of the proportion of the added value of the tertiary industry in the GDP in 2002, the impact of the decline in the growth rate of the tertiary industry on the economic growth rate in 2003 was also about 0.4%.
However, when studying the impact of COVID-19 on economic growth in 2020 with reference to atypical pneumonia, it is necessary to fully consider the differences in the international and domestic economic growth backgrounds between the two pneumonias: First, the world where COVID-19 and the atypical pneumonia occurred in 2003 The economic growth background is different. Atypical pneumonia occurred during the upward period of world economic growth. From 2001 to 2004, the world economic growth rate was 1.95%, 2.18%, 2.96%, and 4.40%, respectively, showing a clear upward trend. At the same time, China has just joined the WTO, and China’s exports of goods have grown rapidly, which has a strong stimulating effect on China’s economic growth. From 2002 to 2007, the growth rate of China’s exports of goods has always remained above 20%. Among them, the average growth rate in 2003 and 2004 was 35%. The impact of atypical pneumonia on exports of goods was quickly compensated. This time COVID-19 occurred during a period of downturn in world economic growth. From 2017 to 2019, the world economic growth rate was 3.11%, 2.97%, and 2.4%, respectively, which were declining year by year, plus the negative impact of the Sino-US trade friction that had lasted for nearly two years , The stimulating effect of goods exports on China’s economic growth has weakened. From 2017 to 2019, the growth rate of China’s exports of goods was 11%, 7% and 5% respectively, showing a clear downward trend. Therefore, the impact of COVID-19 on the export of goods cannot be easily compensated for quickly. Second, the background of domestic economic growth is different. SARS occurred during a period of rising economic growth in China, and then showed double-digit economic growth for 5 years (10% in 2003, 10.1% in 2004, 11.4% in 2005, 12.7% in 2006, 14.2% in 2007) . The growth rate of consumer demand and investment demand, especially investment demand, maintained rapid growth. From 2003 to 2005, both the nominal and actual growth rates of investment in fixed assets in the whole society remained above 20%. This time, COVID-19 occurred during a period of downturn in China’s economic growth. From 2017 to 2019, China’s economic growth rate was 6.9%, 6.7%, and 6.1%, respectively, and the growth rate dropped year by year. The growth rate of consumer demand and investment demand, especially the growth rate of investment demand, is significantly slowing down. The growth rates of fixed asset investment (excluding rural households) from 2017 to 2019 were 7.2%, 5.9% and 5.4%, respectively. The impact of COVID-19 on consumer demand and investment demand is difficult to quickly make up for in the short term. However, it is worth noting that compared with the SARS in 2003, China’s economic growth also has favorable conditions in response to the impact of COVID-19. First, the Chinese government’s measures to control COVID-19 are swift and severe, and the duration of the epidemic may be shorter than that of SARS. In 2020, the Chinese government has ample time and space to adopt countercyclical monetary and fiscal policies to restore the economy; secondly , China’s total GDP in 2019 is close to 100 trillion yuan, compared to only 13.7 trillion yuan in 2003. The current ability to withstand the risk of COVID-19 has been significantly enhanced; once again, China’s new economic and new drivers are developing rapidly. Significant changes are taking place in lifestyles. Consumers are increasingly shopping online. Practitioners can choose to work from home. Online behaviors such as these will have a certain substitution effect on the reduction of offline sales and work inconvenience caused by COVID-19. .
Judging from the above situation, the impact of COVID-19 on economic growth in 2020 may be greater than the impact of SARS on economic growth in 2003. The main impact is in the first quarter, and the impact in the second quarter will be significantly weakened. The economic growth rate will rebound under the action of a series of policies, and it will maintain steady growth in the fourth quarter. Therefore, China’s economic growth in 2020 will show the opposite trend from 2019, that is, a rebound trend. Therefore, it is not necessary to be too pessimistic about the impact of COVID-19 on economic growth, but we must attach great importance to it, properly respond to it, and minimize the impact on economic growth.
(4) Looking forward to the income growth of various economic entities in 2020 from the perspective of income
Judging from the perspective of income, the growth rate of the national per capita disposable income of residents, the total profits of industrial enterprises above designated size and the national general public budget revenue in 2020 may be lower than in 2019.
The economic growth rate and policies related to people’s livelihood have an important impact on the growth of residents’ income. The decline in economic growth in 2020 will have a downward effect on the growth rate of per capita disposable income of residents across the country. The Central Economic Work Conference in December 2019 pointed out: “We must consolidate and expand the effectiveness of tax and fee reductions”, “take multiple measures to maintain a stable employment situation”, “strengthen people’s livelihood orientation,” “do a solid job in ensuring people’s livelihood, and continue to improve people’s lives”. These policy requirements will promote the growth of per capita disposable income of residents across the country. Combining the above two factors, the growth rate of national per capita disposable income in 2020 may be lower than that in 2019, but the decline is limited.
Preliminary judgment is that the growth rate of total profits of industrial enterprises above designated size in 2020 may fall. The main reasons are as follows: First, the growth rate of operating income has fallen. Preliminary judgment is that the growth rate of operating income of industrial enterprises above designated size in 2020 will be lower than that in 2019, leading to a decline in the growth rate of total profits of industrial enterprises above designated size. Second, the increase in product prices fell. Preliminary judgment is that the factory prices of industrial producers in 2020 will continue to be in the falling range, affecting the decline in the total profit growth of industrial enterprises above designated size. Third, the Central Economic Work Conference in December 2019 pointed out: “We must implement tax and fee reduction policies, reduce corporate electricity, gas, and logistics costs, and effectively promote the disposal of’zombie enterprises’.” These policies will benefit industries above designated size. The growth rate of total corporate profits rebounded. Based on the above factors, the growth rate of total profits of industrial enterprises above designated size in 2020 may be lower than that in 2019, but the decline will not be very large.
Preliminary judgment is that the growth rate of national general public budget revenue in 2020 may fall. The main reasons are as follows: First, the economic growth rate has fallen. Based on previous judgments, China’s economic growth rate in 2020 may be lower than that in 2019, which will affect the decline in the growth rate of the national general public budget revenue. The second is the decline in price growth. According to the previous judgment, the ex-factory prices of industrial producers in 2020 will continue to be in the falling range, leading to a decline in the growth rate of the national general public budget revenue calculated at current prices. The third is the decline in corporate profit growth. Affected by factors such as the decline in economic growth and the decline in producer prices, the growth rate of corporate profits may fall, leading to a decline in tax revenue growth and driving the decline in the growth rate of general public budget revenue across the country.
In 2019, in the face of a complex situation with a significant increase in domestic and foreign risks and challenges, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at the core, all regions and departments conscientiously implement the decisions and deployments of the Party Central Committee and the State Council, and adhere to the general tone of the work of seeking progress while maintaining stability. Adhering to the new development concept and the supply-side structural reform as the main line, China’s economic operation is generally stable, the economic structure continues to improve, the new economy and new drivers are growing rapidly, and the quality of development continues to improve.
From a production point of view, China’s GDP growth rate in 2019 showed a downward trend, but it was always within the expected target range; the tertiary industry played a major role in driving GDP growth, but its decline in growth rate also had a major impact on the decline in GDP growth rate; The GDP growth rate in the first three quarters fell quarter by quarter, mainly driven by the quarterly decline in manufacturing growth. From the perspective of demand, the growth rate of consumer demand and investment demand in 2019 has fallen, and the contribution rate to GDP growth has declined; the net export demand has turned from decline to growth, and the contribution rate of GDP growth has increased. However, GDP growth is mainly driven by domestic demand, and consumer demand in particular plays a major role in driving GDP growth. From an income perspective, in 2019, the national per capita disposable income of residents maintained a steady growth; the total profit of industrial enterprises above designated size turned from a relatively rapid growth in 2018 to a decline; the national general public budget revenue growth rate has declined. From a price point of view, the increase in consumer prices in 2019 has expanded compared with 2018, and the price of industrial producers has changed from a relatively rapid increase in 2018 to a decline; the increase in consumer prices has increased, resulting in the actual growth rate and nominal growth rate of the national per capita disposable income. The growth rate has shown the opposite trend, and the actual growth rate and the nominal growth rate of the national per capita consumption expenditure have also shown the opposite trend; the ex-factory price of industrial producers has changed from a relatively rapid increase in 2018 to a decline, which has affected the trend of industrial enterprise profits. From a structural perspective, the industrial structure, demand structure and income distribution structure continued to improve in 2019. From the perspective of new economic drivers, the rapid growth of high-tech industries, strategic emerging industries and other emerging industries have played an important role in slowing down the downward pressure on traditional economic growth.
Judging from the perspective of production, economic policies such as innovation-driven will promote the new economy and new kinetic energy to continue to maintain rapid growth in 2020, and slow down the downward pressure on traditional economic growth. Judging from the demand perspective, the growth rate of consumer demand may be lower than that in 2019, with a limited decline; the growth rate of investment demand is roughly the same as in 2019; the growth rate of net export demand has fallen. Considering the impact of production, demand and COVID-19, it is preliminary judged that China’s economic growth rate in 2020 may be lower than that in 2019. Among them, the economic growth rate in the first quarter will be significantly lower than that in the same period in 2019, and the second quarter will be lower than that in the first quarter. Significant rebound, continued to rebound in the third quarter, and stabilized in the fourth quarter. Therefore, China’s economic growth in 2020 will show the opposite trend from 2019, that is, a rebound trend. From the perspective of income, the national per capita disposable income, the total profit of industrial enterprises above designated size, and the national general public budget revenue growth rate may all fall back from 2019.