Bank of China Economy: Mainland GDP growth rate should be maintained next year

The Bank of China Research Institute released the 2020 Economic and Financial Outlook Report, stating that this year the Chinese government has stepped up its policy counter-cyclical adjustments and actively implemented the six stability policy. The economy as a whole is still operating in a reasonable range. It is expected that GDP growth will be 6.1% this year About 0.5% lower than the previous year. The Report is generally cautiously optimistic about China s economic situation next year, and recommends that stable growth, especially Bao Liu, be the core of macroeconomic control policies. Infrastructure investment is still the focus of fiscal development; while monetary policy is increasing countercyclical control,, Pay more attention to structural adjustment, there is still room for reduction in the future, Considering multiple factors, it is recommended that the standard should be reduced 2 to 3 times in 2020.

The Report points out that China s economy will face increased risks next year. According to the current market environment, if the policy is not adjusted significantly, China s natural economic growth rate next year is likely to be less than 6% . But looking at the three goals of double doubling, building a well-off society in an all-round way, and crossing the middle-income trap, China s economy is generally cautiously optimistic.

Consolidation of the basic role of consumption

The Report analyzes that on the one hand, the substantial impact of Sino-US trade frictions and mutual tariff increases will continue to affect exports and market confidence; adherence to no housing and speculation and comprehensive tightening of real estate financing have caused real estate investment to fall at a high level; The reduced policy space for tax cuts affects the effectiveness of fiscal and monetary offensives.

On the other hand, the loosening of global monetary policy continued to cut interest rates and the increase in international capital inflows, which will help improve liquidity and corporate financing. The stabilization of automobile consumption and the continued development of new consumption will further strengthen the fundamental role of consumption.

Infrastructure investment is still expected to be the focus of fiscal development next year, and it is expected that the scale of special bond issuance will increase to leverage more social funds. The growth rate of infrastructure investment next year is expected to continue to pick up in the future; with the continued development of a stable consumption policy, whether key consumption such as automobiles can stabilize is the key.

In addition, the low base factor also promotes the weak repair of foreign trade growth next year. In addition, under the influence of tail-striking factors, pork supply will still be constrained in the first half of next year, and prices may be difficult to fall to the bottom. The consumer price index (CPI) increase next year will show a high front and low back trend; the factory price of industrial products (PPI) Or from negative to positive.

The Report predicts that the currency and social financing will grow steadily next year, but the lack of effective credit demand is still a constraint on credit lending; the annual increase in RMB loans will be about 18 trillion yuan.

The Report also recommends the comprehensive use of measures to reduce standards and interest rates to guide the reasonable and appropriate growth of monetary credit. Considering that China s deposit reserve ratio is still at a relatively high level in the world, there is still room for reduction in the future. Considering various factors, it should be reduced 2 to 3 times in 2020. In the future, it is necessary to comprehensively use measures such as LPR and MLF to guide the downward interest rate and reduce the excessive fluctuation of interest rates in the money market, so as to promote the downward cost of commercial bank deposits.

Should set up special support for technological transformation investment

The Report proposes to increase the innovation of structural monetary policy tools to support the high-quality development of the manufacturing industry. The current decline in manufacturing investment not only increases downward pressure on investment, but is also not conducive to high-quality development of the manufacturing industry. Due to the characteristics of large investment in technological transformation of the manufacturing industry and uncertain expected returns, the coverage of policy funds such as fiscal funds is low. In the future, consideration can be given to determine a mortgage supplementary loan (PSL) line, which is specifically used to support manufacturing investment in technological transformation to promote the stability of manufacturing investment.

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