Thread by @ChinaFinance40

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

Inflation in China has shown remarkable structural divergence amid the fast recovery in the previous period: driven by rising commodity prices, PPI recovery has been accelerating, but the room for further growth will be limited; 4/8

the core CPI remains depressed, meaning the aggregate domestic demand remains sluggish. 5/8

Consumer spending remains weak from the pandemic’s blow. Passive savings accumulated during the pandemic has not been rapidly released after covid comes under control, and growth in consumer spending could remain sluggish. 6/8

In 2H21, even if export is strong driven by external demands, real estate&infrastructure investment may go down with weak credit expansion. If domestic demand can’t make up for decreased external demand, the output gap that was closing may widen again, pushing up unemployment.7/8

Hence, the primary goal for the macroeconomic policies in China should be to boost domestic demand to close the output gap. Contraction of policies to any extent risks encumbering economic recovery, and China also needs stronger policies for economic stability. 8/8