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    China’s GDP: Five Things to Watch Before Promoting Phase 3 of Xi

    China is an important economic and political milestone for President Xi Jinping, who is seeking an unprecedented third term as the head of the Communist Party, the military and the government, and estimates GDP growth for the fourth quarter and the full year on Monday. Will be announced.

    Last month, the party’s Politburo emphasized the importance of stabilizing the economy and financial system that was hit by the recession. Real estate sector.. However, it did not indicate the intention to abandon the policies that led to the defaults of Evergrande and other large developers.

    Balancing stability and fiscal discipline will test the West economic team, led by Deputy Prime Minister Liu He, over the next few months.

    Here are five things to keep in mind with this release:

    Is quarterly growth close to zero or above 1%?

    On a quarterly basis, China’s economy grew by only 0.2% in both the first and third quarters of last year and 1.2% in the second quarter.

    Quarterly figures are far more accurate indicators of economic health than the year-over-year heading figures that plunged due to the Covid-19 pandemic and then recovered.

    Full-year growth in 2021 should easily exceed the official target of 6%. However, with low quarterly readings, Mr. Liu and the central bank are effectively managing as chairman of the government’s Financial Stability Development Commission, putting pressure on them to do more to boost growth. I will call you.

    Is the outlook for the real estate sector continuing to deteriorate or is it stable?

    Real estate prices in 70 big cities in China fell 0.3% in November compared to October. This is the largest monthly decline in almost six years.

    This is what Xi saysCommon prosperityTo be one of the most unequal countries in the world in terms of wealth distribution. However, a sharp drop can also have unintended economic consequences.

    This sector is estimated to account for more than a quarter of total economic output. The predicament of the last few months has been reflected in the slowdown in fixed asset investment, with a 5.2% year-on-year increase between January and November.

    This was slower than expected, well below the year-to-date 7.3% in September, when it became clear that the leverage limits imposed on developers in 2020 would likely drive Evergrande to default.

    Is the party’s Zero Corona strategy sustainable or are you trying to incur unacceptable costs to the economy?

    China’s export sector has been strong since the coronavirus was effectively contained in the first half of 2020. Regular blockages at large ports to contain critical manufacturing areas and local clusters have not consistently curbed strong overall export growth.

    However, this can change as more infectious variants of Omicron threaten to cause more blockages than ever before. Retail sales in November increased by just 3.9% year-on-year, well below consensus forecasts of 4.7%.

    This week, Xi’An, the capital of a population of 13 million, and two smaller cities have been completely closed. The other two major cities, Tianjin and Shenzhen, are implementing partial blockades to facilitate testing of the entire city.

    However, the party is unlikely to ease its uncompromising approach to pandemic measures until the party convention (which is likely to be held in October or November) officially approves Xi’s third administration. ..

    Will increasing pressure on the Chinese economy lead to stronger monetary policy responses?

    The central bank of China lowered the benchmark one-year loan prime rate for the first time since April 2020, but only reduced 5 basis points. Also, the five-year benchmark used to price mortgages has not changed.

    Instead of relying on “flood-like stimuli” that undermine its efforts, the People’s Bank of China is trying to turn its credit to favorable sectors of the economy, such as agriculture and high-tech manufacturing, to reduce the targeted reserve requirement ratio. I liked to use it.Suppress in the last few years High debt level..

    Will China’s demographic peak arrive earlier than expected?

    The National Bureau of Statistics may release a tentative estimate of the country’s 2021 birth rate, the number of births per 1,000 people. In 2020, it fell from 10.5 in the previous year to 8.5, falling below 10 for the first time.

    China recorded 12 million births in 2020, the lowest number of births in almost 60 years.

    China’s GDP: Five Things to Watch Before Promoting Phase 3 of Xi

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    The post China’s GDP: Five Things to Watch Before Promoting Phase 3 of Xi appeared first on Eminetra.

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