But if we jump out of the traditional theory, from the analysis of the rapid growth of China's GDP, the separation of PPI (industrial product price index) and CPI, the high level of fixed asset investment and the slowdown of M2 growth, we may be able to draw a Conclusion - The current domestic economy has entered a new period of development.
If historically, the domestic economy suddenly emerged from high-speed growth, overheated investment and high inflation, economic growth slowed down, industrial restructuring led to a decline in corporate profits, domestic investment slowed down, and bank credit growth slowed down, etc. It is very normal. Especially for the economic growth that is driven by bank credit out of control, local government leadership and real estate unilaterally, this slowdown will not only alleviate some of the contradictions and bottlenecks in the current economy, but also create some conditions for the future development of the domestic economy.
In recent years, the driving force for rapid domestic economic growth has been mainly reflected in the growth of import and export trade, the growth of private and government consumption, and the growth of fixed asset investment.
For the import and export trade, although the short-term terms of trade that promote the sharp increase in China’s export growth have changed a lot, such as the appreciation of the US dollar, the change in the outlook for the euro, the increase in international trade friction, and the bursting of the global real estate market bubble, which may lead to economic recession, The long-term driving factors for China's export growth have not changed much, such as the opening up of the economy and the degree of internationalization, the abundant human resources, and the rapid expansion of “Made in Chinaâ€. That is to say, although domestic economic growth is highly dependent on foreign countries, factors such as world economic fluctuations and trade disputes may have an impact on the domestic macro economy, they cannot weaken the competitiveness of China's export trade. The growth of import and export trade is still domestic economic growth. power.
From the perspective of private and government consumption growth, data on retail sales shows that private consumption has been increasing since 2002, and total social retail consumption growth rate was 13.3% from January to April this year. And the two main drivers of rapid economic growth - car and housing, although some recent policies have led to a slowdown in growth, but still maintain a high level of operation, such as the average sales price of commercial housing in May rose more than 11% From January to May, national residential investment increased by 21.8%. For government consumption, after years of fiscal expansion, its expenditure growth has been controlled below the level of income growth. Government consumption has gradually weakened since 2001, but local government implicit debt growth and urbanization have not been reversed. .
As for domestic fixed asset investment, after a series of macro-control measures, investment growth slowed down, but it still operated at a high level in 2004, which was a year-on-year increase of 26.4%.
Therefore, although the growth of domestic demand has slowed down, it is still at a high level, that is, the rapid growth of the national economy has not undergone substantial changes, and domestic economic growth has continued.
There is no reason why PPI, which has remained at 5% or higher for 14 consecutive months, is not transmitted to CPI. First, housing prices, housing prices have remained at double-digit growth levels for more than a year, and the biggest driving force for domestic economic growth is real estate and related industries. The high-end PPI is basically transmitted to housing prices; Second, the government strictly controls the prices of certain consumer goods, and once this regulation is relaxed, the price increase of upstream products is quickly transmitted to downstream products. For example, in the price of CPI housing in May, the price of water, electricity and fuel rose by 8.9% year-on-year, and the increase was more than two percentage points higher than that in the same period of 2004. Coupled with the lack of representativeness of CPI, the proportion of final consumption to GDP is low, which are factors that affect the transmission of PPI to CPI.
Fixed asset investment is at a high level and M2 growth is slowing down, largely due to the plight of China's financial system. On the one hand, the rapid growth of household savings, many of the bank's remaining funds can not find a good investment channel, on the other hand, many small and medium-sized enterprises need funds can not get loans in the bank, they have to turn to local financial borrowing and private credit. After the macro-control last year, Tangshan banks have stopped lending to hundreds of various steel companies in the city. The main part of the steel companies can only be financed by government financial loans. Due to the low interest rate of banks, the willingness of residents to save has dropped to a new low for two consecutive quarters, which has caused a large amount of funds to circulate outside the bank.
In short, as far as the current economic situation is concerned, as long as export growth does not decrease, house prices are rising, domestic economic growth will not change, and deflation will not occur, but growth will slow down under effective macroeconomic regulation and control. This slowdown only shows that the domestic economy has entered a new adjustment period.
The current macroeconomic situation has entered an adjustment period
Judging from the statistics of the Bureau of Statistics, people cannot make an accurate judgment on the current macroeconomic situation: is it inflation or deflation? Is it overheating, or is it entering the downtrend channel? On the one hand, high-speed GDP growth has continued, domestic fixed-asset investment is running at a high level and is facing a rebound, import and export trade is booming, raw product price index is still rising and commodity housing prices remain high; on the other hand, M2 growth is slowing, CPI (Consumer Consumer Price Index) has fallen for several months, and the profit growth of industrial enterprises has declined. Therefore, using traditional theories to observe the above phenomenon can not only conclude that the country is still facing economic overheating, but also conclude that the Chinese economy is facing the risk of deflation.