TREAD:China’s #GDP grew by 3.2% yoy in Q2,but high-frequency data in Jun show that the recovery is slowing down in some sectors. For its economy to return to pre-pandemic level,a few more quarters are still needed,according to a CF40 #Macroeconomic report to be released soon: 1/7
PRODUCTION recovery in China has begun slowing down, particularly for some downstream industries like textile, papermaking, wine and beverages, agricultural byproducts etc. 2/7
CONSUMPTION recovery lacks momentum. Demand for durable consumer products such as commercial houses and cars is improving following the peak of the pandemic, but the recovery has shown sign of slowing down. 3/7
LAND TRANSACTION AREA, as a leading indicator of real estate investment in China, saw sizable decline in June from May and April. Two consequences of weak economic recovery are low price level (core #CPI for June: 0.9%) and high unemployment rate. 4/7
Four policy suggestions based on the current situation: It is still necessary for China to strengthen counter-cyclical measures while maintaining moderate flexibility in macroprudential policies and enhancing financial regulation: 5/7
1. Monetary policy should be active and loose to keep the interbank rate at low and stable level.
2. Strengthen the coordination between monetary and fiscal policies to improve the efficiency of countercyclical policies.
6/7
3. Allow moderate flexibility in macroprudential policies and improve banks’ capability in serving the real economy.
4. Further optimize financial regulation, strictly ban abuse of funds and improve incentive mechanism.
7/7 #COVID19 #economics #economicrecovery
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