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Enhancing the Transformation of the Mode of Economic Development: Intensifying Policy Elasticity to Ward off Risks
2011-12-29
-- An analysis of economic situation in 2011 and prospects for 2012
DRC Task Force on Analysis of Economic Performance
In the context of a big pressure of domestic price rise and the continuous international economic upheaval, the CPC Central Committee and the State Council, by keeping to the set macro-control, policy in light of actual economic performance with a forward-looking manner and seeking balance in price control, smooth growth and structural readjustment, have effectively contained the excessively fast price rise and maintained the steady and rapid economic development. Under the impact of the debt crisis hitting the United States and Europe, the world economic situation in 2012 would become sophisticated and, as big countries like the United States, Germany, France and Russia would have government election, precarious factors of various sorts have increased evidently. China's domestic demand is also under the pressure of slowdown, and latent risks have increased in such fields as the real estate market, the investment and financing platforms and the nongovernmental lending and borrowing business. While continuing to implement the proactive financial policy and the prudent monetary policy, we need to intensify the elasticity and flexibility of macroeconomic policies, further release the vitality and potentials of micro-subjects, endeavor to ward off and mitigate various sorts of risks, actively expedite the institutional reform and structural readjustment and strive to achieve substantial progress in the transformation of the mode of economic development.
I. Features and Development of the Economic Performance in 2011
Since the beginning of 2011, the government has, as the primary task, focused on price control in implementing macro-control policy. With positive effects induced by this policy, economic performance has been smooth with the following features and development trends.
1. Price rise has declined from its peak and CPI has risen about 5% for the whole year
Affected by such factors as the weakening base effect, the improving monetary conditions and the declining prices of staple commodities, CPI has shown a downward trend from its peak of 6.5% in July, up by about 5% for the whole year. Firstly, monetary conditions for price control have improved continually. In August, the broad money (M2) increased by 13.5%, year on year, the narrow money (M1) increased by 11.2%, year on year, and the credit balance increased by 16.4%, year on year, making it possible to realize as scheduled the objectives set for the money and credit control for the whole year. Secondly, the pressure of imported inflation has mitigated. Under the impact of American and European debt crisis, the global economic growth has slowed down evidently, plus risk avoidance on the market, the US dollar has rebounded shortly, prices of staple commodities have reduced and the import price index tends to go down. Thirdly, the food prices have stopped rising and dropped and pork price rise has declined year on year. At present, the ratio of pig price to corn price has dropped under 8. The grain yield has increased in eight years running, being beneficial to stabilizing grain and food prices.
2. Economic growth has slowed down slightly and the yearly growth would stand slightly at over 9%
In the first 8 months, investment in the manufacturing industry and in real estate market grew rapidly, yet growth of investment in such infrastructure facilities as communications and electrical power slowed down evidently, and the fixed asset investment grew by 25%. As vehicle and housing-related consumption growth declined markedly, the total retail sales of consumer goods dropped 5.6 percentage points as compared with the same period of the previous year. At present, the slowdown of the world economic growth has not yet produced remarkable influence over China's export. In the first 8 months, exports grew by 23.6%. It is predicted that the yearly exports will grow by 20% or so and the trade surplus will reach around 160 billion US dollars.
In terms of both domestic and external demand, the moderate decline of the growth of the aggregate demand since 2011 has been mainly a result of active control through macro-economic policies, which is beneficial to controlling the price rise and realizing the overall balance of the economic operation. Based on an increase of 9.6% in the first half of the year, GDP will decrease slightly in the third and fourth quarters. It is estimated that the yearly GDP growth will be slightly higher than 9%.
3. Initial success has been made in real estate control
In the first 8 months, the number of commercial housing sold nationwide increased by 13.6%, year on year, and the sales volume increased by 25.9%. The real estate market operated steadily on the whole. Construction of low-income housing was conducted as scheduled, making up for the shortfall of commercial housing investment to a certain extent. Investment for real estate development grew by 33.2%, playing an active role in stabilizing the growth of overall investment and containing the rise of commercial housing prices. In particular, the overall implementation of the restriction policy on housing purchase and the collection of property tax on a pilot basis contained the demand for real estate investment to a certain extent. Housing prices eased in first-tier cities and went down in some cities. Such prices went up mildly in second- and third-tier cities. The excessively rapid increase of housing prices was initially brought under control. The rectification based on in-depth survey on local investment and financing platforms has contained the ever-growing credit risks and local financial risks related to land and real estate sectors, playing an important role in combating the outbreak of systematic financial crisis.
4. Balanced development between various regions, urban and rural areas as well as internal and external markets has been improved
Economic development in the central and western regions of China has accelerated evidently. In the first half of 2011, GDP of 18 provinces and regions grew by more than 13%, yet GDP growth of only 3 provinces surpassed that percentage. Except for Tianjin, provinces and regions whose GDP growth ranked among top 10 were all in the central and western regions of China. Thanks to wage increase among migrant workers, the rise of prices of farm produce and the implementation of various agriculture-friendly policies, the per-capita cash income of rural residents grew by 20.4% in the first half of 2011, being notably higher than the growth of the per-capita disposable income of 13.2% of urban residents. Since the implementation of crisis-combating measures, positive changes have taken place in China's foreign trade. China's international market share has increased and its exports to developing countries have accounted for more than 50%. And the number of China's general trade has exceeded that of its processing trade. China's import has grown faster along with the steady export grow. China's trade surplus has decreased, with the yearly surplus ratio to GDP down to 2.3% or so, and the balance between import and export has improved.
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