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Interpretation of National Bureau of Statistics’ annual economic data: China’s economy is expected to bottom out

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On January 17, the National Bureau of Statistics released the economic data for the fourth quarter and the whole year of 2022. There were joys and sorrows, and the joys outweighed the worries, which consolidated the foundation for China’s economic retaliatory rebound in 2023.

Economic Data: Significantly better than expected

The annual GDP grew by 3.0% year-on-year, far below the 5.5% target set at the beginning of the year. The total retail sales of social consumer goods decreased by 0.2%, of which catering revenue decreased by 6.3%. The national industrial added value reached 40.2 trillion yuan, and the added value of manufacturing industry reached 33.5 trillion yuan, ranking first in the world.

The national investment in fixed assets increased by 5.1%, especially the investment in high-tech industries increased by 18.9%, 13.8 percentage points faster than the total investment. Private investment only increased by 0.9%, and real estate remained weak. Not only did it fail to play the role of a pillar industry, but it dragged its feet. National real estate development investment fell by 10.0%, commercial housing sales area decreased by 24.3%, and commercial housing sales decreased by 26.7%. The national real estate development prosperity index was 94.35 in December, falling for 11 consecutive months.

The annual export of goods increased by 10.5%, imports increased by 4.3%, and the trade surplus expanded by 35.4%. At the end of the year, the balance of foreign exchange reserves reached US$3,127.7 billion, ranking first in the world. From January to November, the actual use of foreign capital increased by 9.9%, which has exceeded the whole year of 2021 and hit a record high.

For the whole year, imports of crude oil decreased by 0.9%, and imports of natural gas decreased by 9.9%. These two data are very strange. After Russia launched the Ukrainian War, it was severely sanctioned by Western countries, and its discounted energy was mainly exported to China and India. However, it is not reflected in China’s import data. There may be three reasons: 1. China’s economy is weak and the total energy demand is insufficient; 2. Increase the import of more cost-effective Russian energy while reducing the import of energy from other countries; 3. Direct re-export Trade, exporting Russian energy to Europe and other places to earn foreign exchange.

12.06 million new urban jobs were created throughout the year, exceeding the annual target of 11 million. At the end of the year, the national population decreased by 850,000 compared with the end of the previous year, the first negative growth since 1962, marking the official announcement that the population has entered a cycle of negative growth.

Boosting Confidence: Highlighting the Private Economy

The “Twentieth National Congress” of the Communist Party of China has produced a new Politburo, and the Premier and Vice Premier of the State Council are about to emerge. They will all be replaced at the first meeting of the 14th National People’s Congress on March 5, and even the State Councilors may be completely replaced. First of its kind. The new breath has been revealed at the Central Economic Work Conference held on December 15-16, 2022.

The media has generally keenly grasped that the Central Economic Work Conference has particularly emphasized that “starting from improving social psychological expectations and boosting development confidence”, one of the five key tasks deployed in 2023 is to “effectively implement the ‘two unwavering'” (no Unswervingly consolidate and develop the public sector of the economy, unswervingly encourage, support, and guide the development of the non-public sector of the economy); require firm confidence in doing economic work well, summarizing the “six persistences”, which also mentions adherence to the “two unwavering “.

As we all know, the Central Economic Work Conference, which sets the tone, tasks, and policies for the next year’s governance, usually has three speeches, which are the overall deployment of the general secretary, the specific deployment of the prime minister, and the summary of the meeting. Summary of the meeting. The press release is mainly excerpted from the general secretary’s speech.

Compared with the 2021 press release, “boosting confidence” and “unswervingly encouraging, supporting, and guiding the development of the non-public sector of the economy” are also mentioned, just to appease the market and serve as a foil for easing; the main tone is a stern warning that “effectively control Negative effect of capital”, “Set up ‘traffic lights’ for capital, strengthen effective supervision of capital in accordance with the law, and prevent the barbaric growth of capital.” During the raging global epidemic, China’s three trillion-dollar real estate, Internet platforms, and education and training industries are all under strict supervision. Too much is too much, and the vitality will be severely damaged. This will make the economy worse in 2022 and the people will not be able to live.

In recent years, public opinion, scholars, enterprises, and the public have all wondered: Is the Chinese economy “advancing the country and retreating from the people”? Are the direction, rhythm, and intensity of the display self-enclosed or even self-limiting? The Central Economic Work Conference finally sent a strong encouraging signal to the private economy. The degree, priority, and weight are completely different, and it is as sharp as the adjustment of the epidemic prevention policy. First of all, it is required to “vigorously boost confidence”; secondly, it is required to put down the requirement of equal treatment of state-owned enterprises and private enterprises in terms of system and law, and to encourage and support the development and growth of private economy and private enterprises in terms of policy and public opinion; Entrepreneurs’ rights and interests, encouraging and attracting more private capital to participate in the construction of major national projects and short-board projects.

The private economy has the important characteristics of “56789”, that is, it contributes more than 50% of tax revenue, more than 60% of GDP, more than 70% of technological innovation achievements, more than 80% of urban labor employment, 90% of the number of enterprises above. The contribution to China’s economy far exceeds that of the state-owned economy, and its advantages and contributions will continue unabated in the future.

The inefficiency, nepotism and corruption of state-owned enterprises have always been criticized. State-owned enterprises in China’s underdeveloped regions are generally not profitable, and there is no guarantee for old-age care. In order to maximize their benefits, the family members and secretaries of some leaders prefer to go to administrative organs first and enter public institutions second; those in developed regions prefer to enter state-owned enterprises because of high annual salary, There is a lot of oil and water, loose management, and many opportunities to travel abroad. What’s more, unless they are transferred or transferred from the army, civil servants below the division level must take the exam every time they enter.

Unless some pure public goods such as national defense, water, electricity and gas require the monopoly of the state-owned economy and state-owned enterprises, other industries can be released as much as possible. State-owned enterprises should continue to be significantly reduced, and “retirement from the state and advancement of the private sector” is the correct direction, so that the market can play a decisive role in the allocation of resources.

Five Major Policies: Highlight the self-improvement of science and technology

The 2021 Central Economic Work Conference discussed the “seven major policies”, namely macro, micro, structure, technology, reform and opening up, regional, and social policies. In 2022, the “five major policies” are discussed, namely fiscal, monetary, industrial, technological, and social policies, with clearer logic.

The standard configuration of macro policy for many years has been “proactive fiscal policy + prudent monetary policy”. Although the tone has remained unchanged, in China’s political context, even if the monetary policy is very active, it is usually defined as “prudent”. After the meeting, the Ministry of Finance expressed its position on the analysis of the 2023 fiscal policy of “strengthening and improving efficiency”. The “precise and powerful” monetary policy analysis stated that the most critical sentence is “the monetary policy should not be less than this year (press: refers to 2022), and it will be further strengthened if necessary.”

The social policy mentions “the gradual implementation of the policy of gradually delaying the statutory retirement age at an appropriate time”. Based on this, it is predicted that the long-drawn-up delayed retirement plan will be submitted to the National People’s Congress for approval in 2023 with a high probability, and will be implemented from 2024, extending retirement by three or four months every year. If you choose the latter, the burden of refuting pensions and finances will be heavier than expected. The “common prosperity” highlighted at the Central Economic Work Conference in 2021 will be significantly weakened in 2022.

The report of the “Twentieth National Congress” of the Communist Party of China made an overall plan for education, science and technology, and talents for the first time, emphasizing that the three are the basic and strategic support for the comprehensive construction of a modern socialist country. The Central Economic Work Conference called for “the deployment and implementation of a number of major national scientific and technological projects”, and the press release briefly mentioned it. On the one hand, it was limited by the space, and on the other hand, it was temporarily kept secret. Announced at the opening.

Of course, there are other ways and documents to corroborate each other. The Central Committee of the Communist Party of China and the State Council recently issued the “Strategic Planning Outline for Expanding Domestic Demand (2022-2035)” (hereinafter referred to as the “Outline”). A group of forward-looking and strategic national major scientific and technological projects”.

Five Key Points: Highlighting Stimulation of Domestic Demand

The Central Economic Work Conference has deployed five key tasks for 2023. The primary task is to “focus on expanding domestic demand”. After all, the proportion of final consumption expenditure in GDP has remained above 50% for 11 consecutive years, and the total retail sales of consumer goods in 2022 will decline year-on-year. .

In terms of consumption, it clearly supports consumption such as housing improvement, new energy vehicles, and elderly care services. In the second half of 2022, “three arrows” have been shot from credit, bonds, and equity to support the financing of real estate companies; after the meeting, the Central Finance Office released the news, “New measures will be introduced in 2023, focusing on research and solutions to improve the asset and liability status of real estate companies, etc. “. The economic downturn has not been reversed steadily, and the real estate tax legislation will continue to be delayed. The core of the so-called “new development model” of the real estate industry is to remove the financial attributes and establish the people’s livelihood attributes.

The press release mentioned “increasing the income of urban and rural residents through multiple channels”, but did not expand. The “Outline” proposes to “maintain the basic synchronization between the growth of residents’ income and economic growth, the basic synchronization between the improvement of labor remuneration and the improvement of labor productivity, and increase the labor remuneration of workers, especially front-line workers.”

On March 5, 2012, then Prime Minister Wen Jiabao proposed in his government work report that “the overall plan for the reform of the income distribution system should be formulated as soon as possible”, and at a press conference nine days later, he stated that in the last year of his tenure, “we must formulate an income distribution system.” The National Development and Reform Commission once drafted relevant documents, but there were many difficulties, and they were left unfinished. When Japan and South Korea took off economically, they both implemented national income doubling plans, which were very popular. Can China’s national income doubling plan be implemented as soon as possible during the term of the new State Council?

In terms of investment, combined with the analysis of the “Outline”, it is mainly divided into three parts: one is to increase investment in the optimization and upgrading of traditional manufacturing industries, such as promoting high-end, intelligent, and green, and optimizing the planning of important basic industries such as petrochemicals, chemicals, and steel. The second is to expand investment in advanced manufacturing, such as artificial intelligence, advanced communications, integrated circuits, new displays, advanced computing, biomedicine, bio-agriculture, bio-manufacturing, gene technology, new energy, new materials, large aircraft, aviation The innovative application of strategic emerging industries and technologies such as engines, satellites, and digital creativity; the third is to accelerate the construction of infrastructure such as transportation, energy, water conservancy, logistics, ecology, people’s livelihood, and information, such as through the main passage of the “eight vertical and eight horizontal” high-speed railways , build large-scale wind power and photovoltaic bases, promote the construction of comprehensive water conservancy hubs and storage projects, support the construction of a modern logistics operation system of “channel + hub + network”, implement major projects for the protection and restoration of important ecosystems, and make up for the shortcomings in the construction of the medical field Board, speed up the construction of Internet of Things, Industrial Internet, Satellite Internet, Gigabit Optical Network, etc.

From the perspective of export, it is required to continue to play the role of export in supporting the economy, to make greater efforts to promote the stable scale and optimized structure of foreign trade, to promote the stable stock and expansion of foreign investment, and to cultivate new growth points for international economic and trade cooperation. One of the five key tasks in 2023 is to “intensify efforts to attract and utilize foreign capital”, emphasizing the creation of a first-class business environment that is market-oriented, ruled by law, and internationalized, implements national treatment for foreign-funded enterprises, and steadily expands rules, regulations, management, and standards And other system-based openings, and jointly promote the expansion of inland openings, accelerate the opening of borders, and enhance the level of coastal openings.

Main axis of policy: two-wheel drive forward

In general, the main axis of policy in 2023 is obviously “two-wheel drive”, coordinating development and security at the same time, strengthening supply-side reform and demand-side management, improving traditional industries and strategic emerging industries, and promoting positive domestic and international double-cycle interactions , to promote the steady and long-term development of China’s economy.

Three years of the new crown epidemic have polarized China and the United States, and they can’t see the forest for the trees. In the first two years, they bad-mouthed the U.S., believing that China’s GDP would soon surpass that of the U.S., and were blindly optimistic; in the third year, they bad-mouthed China, believing that China’s GDP would never surpass that of the U.S., and were blindly pessimistic.

In January, the “two sessions” of various provinces in China were held one after another, and the economic growth targets for 2023 were determined one after another. The highest in Hainan was about 9.5%, and there were two lower than 5%: Beijing was above 4.5%, and Tianjin was the lowest at about 4.0%. If there is no rare situation such as a severe rebound of the new crown epidemic, due to the low base effect, China’s GDP growth in 2023 is expected to easily exceed 6%, and it is very likely to exceed 7%. The U.S. economy will fall into recession, but China’s per capita GDP will hardly surpass that of the U.S. this century.

The Central Economic Work Conference emphasized that “the new team must have a new atmosphere and new actions” and “use the new atmosphere and new actions to promote high-quality development and achieve new results”, which is intriguing. On October 24, 2022, the sharp drop in China’s stock market is a typical lack of market confidence. After the release of the “New Ten Measures” on December 7, the international market and the market are generally optimistic about the Chinese economy in 2023, hot money is flowing in, and the market exchange rate of RMB against the US dollar is rising steadily. On the morning of January 9, both the onshore and offshore RMB exchange rates rose above the 6.8 mark.

The author is looking forward to the government work report on March 5, 2023, and whether the theme of the Third Plenary Session of the 20th Central Committee will be a new round of comprehensively deepening reform and opening up. The comprehensively deepening reform decision adopted by the Third Plenary Session of the 18th Central Committee is refreshing and inspiring. It has been rare since the reform and opening up 44 years ago. It is expected that the new team will wait for no one, prove itself, and work hard to benefit the country and the people.

(Note: The author is an independent reviewer, WeChat official account: SSWYPL. This article only represents the author’s personal opinion. The email address of the editor is bo.liu@ftchinese.com)

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