Source: Bloomberg
The latest batch of data in China shows that consumer prices (CPI) continue to fall, imports have not increased, and loan growth has slowed. All these show that weak domestic demand will once again become the number one challenge faced by China's economy in 2024.
Even more, whether the response to Beijing will have a big deal, economists are pessimistic.Although they noticed that the official has relaxed the monetary policy, the confidence is low and the real estate industry may limit the influence of the policy.As for the fiscal policy, the Chinese government will not be able to clarify the comprehensive expenditure plan until March next year.
For other parts of the world, this means that China's possibility of decline in demand for goods and commodities and the continuous decline in export prices.This helps to relieve inflation, and it will also exacerbate trade tensions.
"China is struggling to regain the sluggish domestic demand, which is an important challenge facing China in 2024," said Pantheon Macroeconomics Chinese economist Duncan Wrigley.But he also said that the recovery will be "slow and bumpy."
The data released on Friday shows that eliminating food and energy prices, China's core CPI in December increased by only 0.6%year -on -year.This means that the low growth rate at the end of 2022 was returning to the end of 2022. At that time, the turbulence during the storage of Chinese epidemic prevention hit consumer expenditure.China's overall CPI in December fell for the third consecutive month.
Price data shows that the widest price indicator of the China GDP reduction index may decline for the third consecutive quarter, marking "the longest duration since 1999," said Hu Weijun, chief Chinese economist Hu Weijun, chief Chinese economist."Therefore, it is necessary to take more policy easing measures to stimulate the economy."
The other two data released on Friday also show that domestic demand is weak.In December, imports increased by only 0.2%year -on -year, and RMB loan balances hit the slowest growth rate since 2003.
But there have been signs that decision makers may lag behind the situation.In the focus of economic work in 2024, expanding domestic demand was only second, second only to the construction of the industrial system.A participant revealed that the recent seminars held by the People's Bank of China's new leadership team did not mention the problem of shrinkage with experts.
Economists expect that the People's Bank of China will take action as soon as possible on Monday, reduce key policy interest rates, and put more funds to the financial system.
However, due to consumer and corporate confidence in suppressing loan needs, economists are not sure whether this move will be effective.Tong contraction also leads to the increase in actual borrowing costs and weakening the impact of the nominal interest rate.
Barclays Economist Chang Jian recently wrote in the report that China may fall into the "liquidity trap" as early as 2022, so the interest rate reduction has weakened the effect in stimulating loans and expenditure.
"If you want to reverse the economic trend, China needs to use multiple means. The market consensus is that we need to increase financial stimulus and the central government to increase leverage. We also agree with this," they added.
The biggest drag of domestic demand is still the shrinking of the real estate industry.However, the relaxation of financing has begun to relieve the liquidity pressure of developers. The latest real estate industry support measures are that many cities in China have obtained low -interest loans of the central bank and used to acquire existing commercial housing for rental housing.Nevertheless, whether economists still have different views on whether this is enough to stabilize the industry.
"When we assume that real estate activities will stabilize, the core CPI can remain stable," said the Chief Chinese economist Wang Tao on Bloomberg TV this week, "But if the real estate is unstable, we may fall into moreFor a long time, this risk is not small. "
As for financial measures, China usually will not announce the annual budget until the March of the People's Congress.The Chinese government has said that this year will "appropriately" increase fiscal expenditure, and economists expect the central government to increase debt.However, whether this can offset the tightening effect of financing control and control of local governments remains to be observed.
"My wish list is to provide more support for the real estate industry -I hope that the government will introduce more financial stimulus measures," Wang Tao said that it is expected to increase by 4.4%this year."But we expect no large -scale policies, because local finances have internal income power."
