SCIO briefing on analysis of national economic performance of first three quarters of 2021
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E-mail China.org.cn, October 22, 2021
Xu Xianchun:
In the third quarter, there were multiple factors that contributed to the declining economic growth rate, including incidental factors and structural factors. These factors were superimposed on each other, so it made some people feel that the downward pressure on the economy is relatively high. However, we should distinguish between incidental factors and structural factors. Incidental factors, such as coal shortages and floods, are relatively easy to resolve.
China's economic development is very resilient, because we have a huge market and relatively strong production capacity. Given the declining growth rate in the third quarter, what sort of economic growth should we expect in the fourth quarter? I think we could analyze this from two sides. On the one hand, pressure on the economy exists. First, in terms of the base number, last year's economic growth went from low to high. GDP fell by 6.8% in the first quarter, but grew up by 3.2% in the second quarter, 4.9% in the third quarter, and 6.5% in the fourth quarter. The growth rate picked up quarter by quarter, and the GDP growth rate in the fourth quarter was relatively high. I think the 6.5% growth rate has already exceeded the current potential growth rate, which will put pressure on economic growth in the fourth quarter of this year. Besides, some downward factors, such as investment, and specifically infrastructure investment, may slow down. On the other hand, there are also many supporting factors. For example, when it comes to consumption, the national per capita consumption expenditure in the first three quarters actually increased by 15.1%, and the average actual growth over two years was 3.7%. Among them, the two-year average growth rate rebounded 0.5 percentage point from the first half of the year. At the same time, employment is generally stable, and the growth of residents' income is also relatively stable. Among three major economic entities, residents see a relatively stable growth in income. The prevention and control of COVID-19 are stable. Residents' consumption capacity and willingness to spend money are also expected to continue to pick up.
On July 30, the Political Bureau of the CPC Central Committee held a meeting and pointed out that fiscal policy will play a major role in stabilizing growth. The key driver will be the major projects listed in the 14th Five-Year Plan. There are still 1 trillion yuan of special bonds to be issued in the fourth quarter, which may support infrastructure investment to some extent. The central bank requires monetary policy to remain stable, maintain reasonable and sufficient liquidity, and guide the reasonable growth of loans in the second half of the year. It's clear that the monetary policy will remain stable and moderately relaxed, which will promote the development of the real economy. Manufacturing investment may also pick up further. From the import and export perspective, China's favorable conditions, such as a complete industrial system and satisfactory epidemic prevention and control, are still attracting foreign importers. Net export demand in the fourth quarter could still be a key driver for economic growth.
Generally speaking, despite the downward pressure, the economy is still able to maintain a relatively stable growth in the fourth quarter.
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