China Financial Daily

Experts predict: China’s economic growth next year is expected to remain at around 8.5%
The latest issue of “Comment” on the State Information Center deputy director of economic forecasting Zhu Bao-liang article said that the international financial crisis, China’s government introduced a package of targeted stimulus package to curb the rapid economic decline and promote recovery in the economy stabilized . While affirming the achievements, we must also clearly see that China’s economic development still faced with many contradictions and problems, some problems still further accumulation.

Since the outbreak of the international financial crisis, our government introduced a package of targeted stimulus package to curb the rapid economic decline and promote recovery in the economy stabilized. While affirming the achievements, we must also clearly see that China’s economic development still faced with many contradictions and problems, some problems still further accumulation.

The good momentum of economic recovery in stabilizing the problem still exist

- Highlight the problem of excess capacity, some industries are still duplicated.

At present, I made more prominent problem of excess, from the low-to high-end capacity from domestic to foreign demand, production capacity, from traditional to new production capacity are facing varying degrees of excess. First, external demand industry overcapacity problem difficult to solve. Second, iron and steel, nonferrous metals, building materials, chemicals and other traditional industries have excess capacity, but is still under construction to increase the size of new projects. Third, part of the emerging industry has also revealed signs of excess produce.

- Economic growth is mainly dependent on the policy driving, support the endogenous growth momentum is not strong.

This year, China’s economy has shown “growth through investment, investment by the Government” feature. Some state-owned large-scale capital to enter the competitive field, out of a social investment. Social investment due to market confidence, foreign demand, financial constraints, market access restrictions such as the impact of growth, sluggish yet to emerge from the government investment to private investment growth momentum conversion trends. The current consumption growth will mainly depend on policy guidance and encouragement, in the national income distribution system, there is no fundamental change in circumstances, the steady growth in consumption of endogenous mechanisms is hard to form.

- Local investment and financing platform for loans to potential systemic financial risks.

Local government financing and guarantees for infrastructure projects, capital supply and the establishment of various government investment and financing platform as a unified subject to bank loans, those loans, then loans to lending to enterprises or projects, so that the credit of the debt. The majority of new loans this year, the incremental flow of local government financing platform for the company. Government investment and financing platform for the overall high debt ratio, profitability low, less transparent, banks and local governments on the platform, the overall level of debt is difficult to accurately assess the credit fund regulation more difficult, government loans for potential investment and financing platform for the systemic financial risk.

- 2010 a slight improvement in the international economic environment.

While the world countries and international organizations, implemented a series of economic stimulus policies, but in 2010 the process of world economic recovery is still slow and tortuous, the global GDP will slow growth, the global banking system recovery will take time to upgrade the protection of international trade affect the world economic recovery. Countries to the market a large-scale injection of capital has created liquidity of financial assets and in 2009 a significant increase in real estate prices is expected by 2010, high global commodity prices shocks, global inflation may pick up somewhat.

Regulatory policy in the future

- With “steady growth, adjusting structure, promoting reform, benefits the people’s livelihood,” as the basic policy orientation.

“Steady growth” is the primary objective of the current macro regulation and control. Will “ensure growth” to “stable growth”, mainly taking into account the international and domestic factors of instability remain, we need to continue to maintain the continuity and stability of macroeconomic policies to prevent economic ups and downs. Not only to prevent the process of economic recovery due to continue to “protect growth” policy efforts is too large too fast, resulting in excessive investment growth, inflation; but also to prevent the result of policy efforts to stimulate economic growth and policies in effect weakening economy second wheel down.

“Structural adjustment” the urgency of further enhanced. The effect of government investment to weaken, if not through the structure of demand, industrial structure, ownership structure and other structural adjustments to the release of the residents of spontaneous self-consumption and private investment, would be difficult to resolve excess capacity, redundant construction and other issues, it is difficult to achieve growth momentum from the “policy of stimulating domestic demand growth,” to “the autonomy of domestic demand growth,” the switch, it is difficult to maintain macroeconomic stability and sustained rapid growth.

“To promote reform” is to achieve structural adjustment of the fundamental path. The current options for reform should focus on for the benefit of expanding consumption is conducive to industrial restructuring is conducive to private enterprise and SME development as a breakthrough, by promoting the reform of resource prices and factor prices to achieve economic restructuring, through the income distribution system reform and improvement of the social security system and expansion of the consumer, through the deepening of monopoly industries, public utilities and social development in the field of management system, increase the promotion of private enterprise development.

“Hui people’s livelihood” is a fundamental goal of economic development. The focus of macro-control policies tilted to the people’s livelihood, financial expenditures and credit delivery to better meet people’s needs and to increase employment, allowing people to really gain the benefits of economic recovery.

- Adhere to implement a proactive fiscal policy, tax cuts increase the structural strength.

The first is to increase people’s incomes and expanding consumption, the more substantial increase in personal income tax threshold and to maintain the “home appliances, automobiles, motorcycles to the countryside”, “energy-saving products farmer-friendly policy,” “automobile, home appliance trade-in “residents to purchase their first set of self-occupied housing, tax concessions; second is innovation, and implementation of R & D expenses, plus deductions policies, while considered small and medium sized enterprises 3 ~ 5 years of corporate income tax relief; third Energy-saving emission reduction of enterprise income tax for investment in pre-tax deductions plus other measures.

- Insist on the implementation of appropriate loose monetary policy.

Monetary policy should be based on “moderate”, when there is pressure to maintain and optimize loan structure, to ensure that loan to invest in the real economy, under the premise of the continued recovery in the economy to provide a relaxed financing. To avoid the recurrence of credit the first half of 2009 the situation of over-expansion. Regulate the flow of bank credit to block flow of bank funds and credit policy, asset markets some of the loopholes, to promote commercial bank credit to the real economy tilt.

- Promote the benefit of structural adjustment and reform of key areas for the benefit of the people’s livelihood.

Promote the reform of resource prices and the financial system, accelerate the reform of income distribution. First, we must promote the system of collective wage negotiations, efforts to improve workers compensation, to achieve national income distribution to the residents tilt. Second, implement the reform of institutions pay for performance. Third, increasing farmers income and maintain reasonable prices of agricultural products. Fourth, push forward the reform of monopoly industries access to markets. In railway, telecommunications, aviation, petrochemical and other monopolistic industries and public utilities and social development in the field of competition, as soon as possible access to clean unreasonable restrictive trade system to encourage private enterprises to enter these areas.

Forecasting economic trends in 2010

In the international economic environment has improved, the domestic orientation of the current policies remained unchanged in 2010, the decline in exports and foreign investment in China down the situation will be improved, economic growth is expected to remain at around 8.5%, CPI to rise 2.5% about.

- Fixed-asset investment growth rate declined slightly, but still staying power.

The factors that promote the growth of investment is still relatively strong, fixed-asset investment will continue to maintain high growth momentum. But the increment of government investment in 2010 will slow down, excess capacity, redundant construction and other issues will also inhibit the growth of investment.

- Retail sales of social consumer goods continued to grow steadily.

Consumption continued to grow steadily with a number of favorable factors. First, the income levels continue to grow for the expansion of consumption, increased stamina. Second, the social security system will help alleviate the worries of residents and improve the residents marginal propensity to consume. Thirdly, the stock market activity and real estate prices rise has also brought a certain degree of wealth effect. Fourth, the automobile and housing consumption will continue to show growth. In the meantime, the expansion of consumption in 2009 introduced the policy will occur in 2010, decreasing effect of higher prices will lead to people’s real purchasing power fell.

- Exports are expected to increase slightly but the trade surplus continues to shrink.

Of the world economy from negative growth to a slightly significant positive growth, is the basis for China’s exports resumed growth factors, national policies will continue to play a role. However, there was a change in consumption patterns in developed countries, trade protectionism and further intensified, China’s export situation is still not optimistic.

- Industrial production growth accelerated slightly.

First half of 2009, China’s industrial and commercial enterprises have basically completed “to stock” of the task. Countries in the world economic stimulus policy remains unchanged, the international market demand for a modest recovery in domestic investment and strong consumer demand and other factors working together, in 2010 China’s industrial production growth will be slightly higher than this year.

- A modest rebound in the price level.

By 2010, domestic economic growth is still near the lower limit of the potential growth rate of fluctuations in aggregate demand remained inadequate, especially in severe overcapacity in some industries, as well as more abundant food stocks and other issues, the price level difficult to rebound sharply. However, since the second half of 2009, the state initiative to adjust the price of water, oil and other public price, it will directly increase the pressure on consumer prices.