The second half of the year is expected to maintain a stable future in policy

With the entry in July, the market has paid more attention to the macroeconomic situation in the second half of the year. The latest June Finance and New China manufacturing PMI released on July 1 recorded 49.4%, down from 0.8 percentage points in May, falling below the line of prosperity and decline for the first time in four months. Meanwhile, on June 30, the PMI of manufacturing industry published by the National Bureau of Statistics recorded 49.4%, which was the same as last month. It also continued to maintain.

In this regard, the experts interviewed in the economic circles believe that, according to PMI data, economic growth in the first half of the year is expected to decline moderately, but the economy is expected to remain relatively stable in the second half. The future policy is expected to form a combination of "trust + reform", that is, underpinning the economic operation, speeding up the reform process, and it is expected that the marketization of interest rates will be accelerated in the future.

Looking ahead to the future economy, KPMG recently issued the China Business News reporter's "China CEO Outlook Report 2019", pointing out that, in terms of China's economy, more than three quarters of the Chinese CEOs interviewed (77%) expressed confidence or very confidence in the country's development prospects, which was higher than 71% last year.

Economic growth in the second half of the year may be 6.2%

"From leading indicators such as manufacturing PMI, it is expected that economic growth will moderately decline in the first half of the year, and real GDP growth in the second quarter is expected to be 6.3% year-on-year." For the first half of the economic trend, Guojin Securities Macro Analyst Duan Xiaole said in an interview with reporters that, from a sub-point point of view, the decline in export growth brought about by the downturn in global demand has put downward pressure on growth, and growth in investment and consumption remains stable. Yang Chang, head of the China-Thailand Securities Policy Thematic Group, also analyzed in an interview with reporters that "although PMI is still under the dividing line between prosperity and decline, and the PMI of large enterprises falls below the line, according to historical experience, its sustainability is not strong and it may pull PMI back in the future."

From the perspective of enterprise scale, data from the National Bureau of Statistics show that the PMI of large enterprises is 49.9%, down 0.4 percentage points from May, slightly below the critical point; the PMI of medium and small enterprises is 49.1% and 48.3%, respectively, up 0.3 percentage points and 0.5 percentage points from May, and the prosperity has rebounded. A recent report issued by Chinese economists in Beijing also argues that China's macro-economy was "weak and stable" in the first half of this year, and real GDP (GDP) is expected to grow by 6.3% in the first half of this year.

The first half of the year is likely to achieve a "weak stabilization". What is the trend of the economy in the second half of the year? In response, Yang Chang told reporters, "China's economy is expected to remain relatively stable in the second half of the year. Because from three aspects: First of all, with the help of local government special debt, the third quarter social finance data is expected to rebound, and the role of infrastructure in promoting the economy is expected to be further revealed. Secondly, consumption is more resilient. Although automobile consumption dragged down significantly in the first half of the year, the future drag on the economy is expected to weaken. Thirdly, after the G20, the external conditions of import and export have improved in the short term, and the impact on the economy is expected to be greatly weakened. Duan Xiaole also pointed out to reporters that "economic growth in the second half of the year is expected to be around 6.2%, which still has some resilience." According to his analysis, manufacturing investment and consumption should be paid attention to. The latest published data show that industrial enterprises'profits rose to 1.1% in May from a year earlier, up 4.8 percentage points from April, indicating that tax cuts and fee cuts are beginning to play a supporting role in corporate profits. At the same time, manufacturing industry profit is the leading indicator of manufacturing industry investment. With the gradual stabilization and recovery of profits, it is expected that manufacturing industry investment will gradually stabilize, thus supporting economic growth. However, in Duan Xiaole's view, there is still downward pressure on consumption, which needs policy hedging. On the one hand, the decline of asset prices such as house prices leads to the decline of wealth effect and consumption intention; on the other hand, under the background of global economic weakness, the weakness of confidence and expectation also restricts the rise of consumption growth. Therefore, Duan Xiaole believes that future policy support for consumption is expected to be further strengthened. Cheng Shi, chief economist of ICBC International, also holds a similar view. He believes that policy regulation in the second half of the year is expected to start with the structure and promote the moderate rise of the consumption growth center. These include: first, accelerating the release of new forces. In line with the downward trend of consumption focus, a new round of infrastructure development is expected to improve the consumption infrastructure in low-level cities and towns, and open up new retail channels to penetrate the county economy. At the same time, accelerate the equalization of urban and rural public services, thereby activating the county economy to upgrade the demand for medical, recreational, educational and other services consumption. Second, we should avoid losing old power too quickly. In the second half of the year, more subsidies for large consumer goods, such as automobiles and household appliances, will be introduced on the basis of "taking measures in accordance with the city", which is expected to pull automobile sales out of the current trough. Duan Xiaole told reporters that "monetary and fiscal policies may remain relatively positive" in addition to the policy of stimulating consumption.

Because in his view, if PPI turns negative year-on-year in a few months, it does not rule out that the central bank will choose to maintain the neutrality of real interest rate by reducing OMO (Open Market Operations) interest rate and MLF (Medium-term Lending Facility) interest rate. At the same time, the implementation of tax reduction and fee reduction is still expected to be strengthened. Whether the profits of enterprises can stabilize and recover, the dependence on this policy is more obvious. In addition, if the downward pressure of the economy increases further, the new stimulus base will not be excluded.