Thread by @ChinaFinance40

The Chinese #economy has basically met expectations in 1H20, even exceeded expectations in some aspects, according to Liu Shijin, Deputy Director of CPPCC’s Economic Affairs Committee:
mp.weixin.qq.com/s/ulRTEc0fSdvj… 1/8

Under the stress of the #pandemic, the Chinese economy has shown three features:
1. Export-oriented industries picked up quickly, having achieved positive growth again in June and experienced slight growth in 1H20...2/8

The competitiveness of the Chinese export-oriented companies is evident in their flexibility and resilience in the virus outbreak. However, it remains to be seen whether they can sustain these qualities after Q3...3/8

2. Demands recovered more slowly than supplies, partly because there are more institutions on the supply side while more individuals on the demand side, and under administrative and market forces, institutions usually react faster than individuals and are more policy-driven...4/8

3. The supply side is also getting back on its feet recently, but it’s still uncertain whether it can return to its pre-pandemic level. On 2020 CF40 Annual Conference, former PBC Governor Zhou Xiaochuan quoted the concept of “being digital”...5/8

Liu echoed this by pointing out that the pandemic may have eliminated permanently some of the demands such as those for travels and hotels because people can do a lot of things remotely as the world becomes increasingly digital...6/8

He reminded that Chinese policymakers need to be aware of where the #money goes when making macroeconomic policies. In June, social financing and #M2 both grew at a historical speed, far outpacing the growth in #GDP. It’s hard to withdraw the released liquidities...7/8

Policymakers need to balance mid- & long-term debt repayment problems and preventing against near-term bubbles, and consider the direction of money flows. Funds need to be channeled away from dangerous fields such as real estates and stock market and towards the real economy. 8/8