Peering into the near future of the Chinese #economy, Dr. Zhang Bin thinks there will be rebound in #consumption and slowdown of #investment: 1/6

cf40.com/en/news_detail…
Household consumption in #China remains significantly lower than the pre-Covid level, with great potential for recovery. As Covid’s impact lingers, service consumption growth in China remains significantly lower than its pre-pandemic levels. 2/6
Household savings maintain steady growth, with newly-added household deposits coming in at RMB 6.68 trillion in 2021Q1. Going forward, as the temperature rises and the virus is further contained, service consumption will recover further, driving rebound in general consumption.3/6
Meanwhile, infrastructure&real estate investment are under downward pressure. The deceleration of public budget and government fund expenditures, coupled with the increasing difficulty of #debt financing through LGFVs, has put pressure on infrastructure investment. 4/6
Real estate investment is also facing downward strains given that general credit growth has slowed down, and control policies on credit related to banks and real estate companies have been strengthened. 5/6
In terms of manufacturing, the manufacturing industry continues to enjoy strong cash flow, and exports are expected to remain relatively high in the near future, which are set to support #manufacturing investment. 6/6

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More from @ChinaFinance40

20 May
Sudden turns in macroeconomic policies before Q3, 2021 would be inadvisable, says Zhu He, CF40 Research Fellow. It’s not yet time for macroeconomic policies to change direction, not to mention the speed of the turn, he says. 1/8

cf40.com/en/news_detail…
Recent data suggest a slowdown in China’s recovery, with the output gap closing at a slower pace. It remains uncertain whether #export and real estate #investment can sustain momentum in the next two quarters. 2/8
Any weakening of domestic #consumption or manufacturing investment before they return to normal levels would be a big drag on aggregate #demand and economic recovery. 3/8
Read 8 tweets
19 May
Dr. Zhang Bin at CASS suggests to give full play to the flexibility of the #RMB exchange rate as a buffer for China’s macroeconomic stability: 1/6

cf40.com/en/news_detail…
Whether it is to deal with the difference in relative demand changes at home and abroad, or to handle the impact of international capital flows, maintaining a flexible RMB exchange rate would be a major coping strategy. 2/6
Under a flexible exchange rate regime, RMB will depreciate to a certain extent if the US #economy stages a strong recovery while the recovery of the Chinese economy marginally weakens, which’ll have a positive effect on increasing aggregate demand and preventing deflation. 3/6
Read 6 tweets
18 May
Taking stock of China’s economic performance in April, CF40 research department calls for stronger macroeconomic policy supports as consumer spending falls short of expectation while export alone can't sustain the sound operation of the entire economy: 1/8
mp.weixin.qq.com/s/nA9lvfcMXGz-…
To be specific, real estate investment has remained quite resilient, but is facing greater downward pressure with tighter regulations and higher interest rates; 2/8
manufacturing investment has picked up driven by exports; while infrastructure investment falls below expectation and is going to be under the pressure of regulations and fiscal strains in 2H21. 3/8
Read 8 tweets
9 Apr
Fang Xinghai, CSRC Vice Chairman, proposed 4 policy suggestions on promoting comprehensive institutional opening-up of China’s capital market at the 2nd Bund Summit: 1/6

cf40.com/en/news_detail…
1. Continue to open up the capital market and products. Introduce more channels and models for foreign investors to participate, address their concerns, increase the weight of A-shares in international indices,...2/6
...improve the Shanghai-London Stock Connect to cover more major capital markets in Europe, expand offering of futures products to meet the risk management needs of foreign businesses and investment institutions, and introduce more foreign institutional investors. 3/6
Read 6 tweets
8 Apr
Financial development in China is ushering in a historical period of opportunities, said Fan Yifei, Deputy Governor of the PBOC, at the 2nd Bund Summit: 1/8

cf40.com/en/news_detail…

He explained in the following 4 perspectives:
1. Dual circulation calls for high-quality financial development. The key to a smooth domestic economic cycle is a smooth supply-demand circulation and the release of internal forces. 2/8
The financial industry needs thorough digitization and independent innovation, with technologies driving qualitative growth, so as to help enterprises, particularly #SMEs, better connect to the domestic economic cycle. 3/8
Read 8 tweets
7 Apr
To improve the public governance of #data in a digital society, China needs to intensify efforts in the following aspects:
1. Provide legislative support for the classified management of data, clarify data ownership and using rights, and stipulate legal responsibilities in the use and transaction of data, or even establish a special supervisory department or mechanism;
2. Step up regulation on various #AI applications. A set of regulatory mechanisms is needed to manage public-oriented AI applications;
Read 6 tweets

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