Forecasting Chinese Economy for the Years

Transcription

1 Forecasting Chinese Economy for the Years Xuesong Li Professor of Economics Deputy Director of Institute of Quantitative & Technical Economics Chinese Academy of Social Sciences September 30, 2013 In 2013, with the effects of slowly recovery in international economy and gradually improvement in external demand, the new government of China pays more attention to the quality of growth. According to our forecast, China s GDP will increase by 7.7% in 2013, equal to that of the previous year, continue to maintain a steady growth. In 2013, the growth rate of the tertiary industry will continue to be faster than that of the secondary industry. The three industries added value will increase by 3.8%, 7.8% and 8.4% respectively. The growth rate of the primary and the secondary industry will drop by 0.5 and 0.1 percentage points than those of the previous year, while the growth rate of the tertiary industry will increase by 0.3 percentage points than that of the previous year. The three industries will pull the increase of GDP by 0.3, 4.0 and 3.4 percentage points respectively. Compared to those of the previous year, the pull of the primary industry this year will decrease by 0.1 percentage points, the pull of the secondary industry will be the same while the pull of the tertiary industry will increases 0.3 percentage points. The contribution rates of the three industries to GDP are 4%, 52% and 44% respectively. The contribution rates of the primary and the secondary industries will decline by 0.6 and 0.5 percentage points while the tertiary industry will increase by 0.7 percentage points. In 2013, the investment growth in manufacturing is significantly lower than that of the previous year while the investment growth in the tertiary industry and real estate development is higher than that of the previous year. Since the third quarter of the year 2013, the government has moderately increased the support to the investment in key areas and infrastructures. According to our forecast, the investment in fixed assets will exceed 45 trillion Yuan (excluding farmers) in 2013, with a nominal growth of 20.4%, 0.1 percentage point higher than that of the previous year; with an actual growth of 19.2%, 0.2 percentage point higher than that of the previous year. The investment in fixed assets will continue to maintain steady and rapid growth in In 2013, with a rapid growth in real estate sales and information consumption, stable growth in car sales and the effects of the government against wasting public fund, the total social retail sales of consumer goods in 2013 will reach 23.8 trillion Yuan according to our 1

2 forecast, with a nominal growth of 13.3%, 1.0 percentage point lower than that of the previous year. After eliminating the price factor, the actual growth rate will be 11.6%, 0.5 percentage points lower than that of the previous year, continue to maintain a steady growth. In 2013, the whole environment of international trade is slightly better than that of the previous year. The signs of American economic recovery are obvious: the employment continues to improve, the real estate market turned around, the composite index of manufacture rebounded. The Euro Area crisis eased to some extent. Japan has strengthened the monetary and fiscal policy stimulus. After considering the influence of different factors, such as continuous rise of costs of domestic resources and labor, RMB appreciation and so on, we forecast the growth rates of China s export and import will be 8.7% and 7.5% respectively in 2013, 0.8 and 3.2 percentage points higher than those of the previous year, annual trade surplus is US$273 billion or so, with an increase of $42 billion over the previous year. The ratio of trade surplus to GDP is about 2.7%, almost the same as the year In 2013, prices will increase modestly. First, CPI will be lower compared to carryover effect. The carryover effect is 1% in 2013, which is 0.2 percentage points lower than that in the year The decrease of carryover effect will inhibit the rise of CPI to some extent. Second, from the perspective of the factors which cause a rise in price, the problem of domestic excess capacity is more prominent, the price is lack of continuing rising power in fundamentals. Third, from the sight of monetary supply, under the macro policy of Invigorating the stock, making full use of increment and the liquidity management by regulators, controlling the currency has become a basic policy orientation. According to our forecast, the consumer price index and investment goods price index will increase by 2.7% and 1.1% respectively, while the producer price index will decrease by 1.6%, these three prices indexes are all flat compared to the previous year. As in recent years, China's labor market has undergone structural changes, the actual growth rate of the net income per capita of China s rural residents in 2013 will continue to keep higher than that of urban residents since According to our forecast, the net income per capita of rural residents will increase by 9.5%, while the urban residents will increase by only 7.2%. In 2014, the global economy is expected to maintain a moderate recovery trend. The major developed economies may enter into recovery period but the recovery process is very slow, still need to be protected through policies and measures. Some uncertain factors may also have a negative impact on the economic recovery. As American private consumption gradually increased, household balance sheet gradually recovered, investment structure further optimized, technological transformation in traditional industries completed, macroeconomic fundamentals gradually tamped and under the push of new energy and new technology, America might enter into a new round of 2

3 economic growth period. The extent and course the FRB cutting QE3 depends on American domestic economic performance but in the short term there is still volatility and uncertainty in the related indexes. At the same time, the Congress of United States has not yet agreed to raise debt ceiling, so the American government will face financial risk. The Euro Area crisis eased in a way. The European Commission has formally authorized European Central Bank to supervise Euro Area bank industry since the middle of year This will promote the unification process of EU banking regulation and improve the assets and liabilities of Euro Area financial institution. It will make Euro Area financial market gradually stabilized and do good to enhance the confidence of consumers and investors. The EU economy may gradually stabilize and get rid of negative growth, but there is still a long way to go. Japan s economy recovered rapid growth recently, but the marginal effects of its quantitative easing policies are decreasing. Emerging markets and developing economies are still able to maintain relatively high growth rate but the growth momentum are obviously slowing down, the contribution rate to the recovery of the world economy decreases and partial fluctuation increases. Emerging market and developing economies should be cautious to deal with the potential external market risk and its financial risk. They also should actively seek international cooperation to avoid repeated economic crisis. In 2014, China is still in the important period of strategic opportunities. The Third Plenary Session of the 18th Central Committee will make new deployment on comprehensively deepening reform, promoting institutional innovation. According to our forecast, China's GDP growth in 2014 is expected to increase by around 7.5%. China will continue to maintain a steady growth and the government will focus on promoting structural upgrading and innovation. In 2014, the nominal growth rate of fixed asset investment will be 20.1%, the actual growth rate will be 18.5%, slightly lower than those in 2013, but still maintain high growth rate. The nominal and actual growth rates in total retail sales of social consumer goods will be 13.3% and 8.5% respectively, which remain a relatively stable growth. Exports and imports will increase by 9.1% and 8.5% respectively, which will be slightly higher than those in Overall, China's economy will continue to undergo steady growth, moderate inflation, basic balance in labor market and the international balance of payment. Table 1 lists the forecasting results of main economic indicators of national economy for the years In 2014, as long as the economy runs within the reasonable range, the government will keep the macroeconomic policy generally stable, and focus on shifting the growth model and on structural readjustment. In this connection, what is essential is to advance reform and innovation, tap potential domestic demand, and unleash innovation motivation and reform dividends in order to boost market vitality and the internal driving force for growth and 3

4 upgrade the Chinese economy. Table1. Main Indicators Forecasts of Chinese Economy for the Years Main Indicators Forecasts for Forecasts for Total Growth Rate of GDP(%) Industry Growth Rate of Added Value in Primary Industry(%) Growth Rate of Added Value in Secondary Industry(%) where: Growth Rate of Heavy Industry(%) Growth Rate of Light Industry(%) Growth Rate of Added Value in Tertiary Industry(%) the Pull of the Primary Industry to GDP Growth(percentage point) the Pull of the Secondary Industry to GDP Growth(percentage point) the Pull of the Tertiary Industry to GDP Growth(percentage point) Contribution Rate of the Primary Industry(%) Contribution Rate of the Secondary Industry(%) Contribution Rate of the Tertiary Industry(%) Investment Investment in All Social Fixed Assets(one hundred million Yuan) Nominal Growth Rate(%) Actual Growth Rate(%) Investment Rate of Expenditure-based(%) Consumption Total Retail Sales of Social Consumer Goods(one hundred million Yuan) Nominal Growth Rate(%) Actual Growth Rate(%) Foreign Trade Total Exports(one hundred million dollars) Growth Rate of Export(%) Total Imports(one hundred million dollars) Growth Rate of Import(%) Trade Surplus(one hundred million dollars) Price Growth Rate of CPI(%) Growth Rate of PPI(%) Growth Rate of Investment Goods Price Index(%) GDP Deflator(%) Resident Income Growth Rate of Urban Residents Per Capita Disposable Income(%) Growth Rate of Rural Residents Per Capita Disposable Income(%) Fiscal 4

5 Fiscal Revenues(one hundred million Yuan) Growth Rate of Fiscal Revenues(%) Fiscal Expenditures(one hundred million Yuan) Growth Rate of Fiscal Expenditures(%) Finance Incremental Loan(one hundred million Yuan) Incremental Currency(one hundred million Yuan) Household Saving Deposits Balance(one hundred million Yuan) Growth rate of Household Saving Deposits Balance(%) M2(one hundred million Yuan) Growth Rate of M2(%) Total Loan Balance(one hundred million Yuan) Growth rate of Total Loan Balance(%) Aggregate Financing to the Real Economy(one hundred million Yuan)