Fiscal stimulus results in the second half

Wen | The reporter Wang moved China's Shanghai and Shenzhen stock market and the whole macro-economy has shown a clear upside, but how long can this trend be maintained? Has China's economy really recovered in advance? Macro-data exceeded expectations according to statistics published by the National Bureau of Statistics, GDP growth reached 6.1% in the first quarter of 2009, although not comparable to the level of 2007 ago, but has gone far beyond the investment agency's forecasts. "While the level of GDP growth has slipped, it is higher than we expected."　　"said Sun, chief economist for the Greater China region of Nomura Securities.　　In fact, not only GDP but almost all macroeconomic indicators show that China's economic environment is indeed much better than expected before the Lunar New Year. "Household consumption has rebounded, while export growth is showing signs of bottoming out."　　"said Wang Tao, China's chief economic economist at UBS. The export sector, the hardest hit in the financial crisis, is not easy to improve. Customs statistics show that in March China's exports fell 17.1% Year-on-year, imports fell 25.1% year-on-year. Despite a year-on-year negative growth, the situation has increased significantly, with exports and imports falling by 4% and 9.1% per cent from the average in January 2009 and February.　　If and February on the chain calculation, then March export quarter-on-quarter growth of 32.8%, import chain growth of 14%, the trend is obvious. Exports have long been an engine of economic growth in emerging markets and significant for the Chinese economy. Previous declines in trade volume were also the main reason why China's economy was weak in the fourth quarter of 2008.　　Chinese investors are naturally overjoyed to see exports rebound.　　More exciting for investors is that the other engine of China's economy-real estate and related construction-has also seen a warming trend.　　In the aftermath of the Lunar new Year, buying enthusiasm for falling house prices, as well as the release of China's rigid demand, has also seen a pick-up in the price of real estate volumes. Of course, the improvement in property sales in recent months is still a far cry from the 20.9% growth rate of the same period in 2008.　　But such an important industry has finally rebounded, the meaning of the Chinese economy can be imagined. At the end of April, Wang Qing, chief economist at Morgan Stanley's Greater China, said: "We have recently adjusted the growth rate of real estate investment significantly, from 12% to 0, which means the real estate sector will not fall again." In terms of the situation so far this year, we think the 2009 real estate investment recovery will be faster than we had expected. "Sales growth also stimulated real estate investment, and real estate construction investment affects the entire industrial chain, for every sector of China's economy, have irreplaceable role."　　Investment in real estate development, which shrank to 1% in the two-month period 2009 years ago, achieved a growth rate of 7.3% per cent in March. Investors are hoping that with the help of a dual engine, China's economy will soon improve.After all, the bitter days are too bad.　　The hard days are not over. The economy's recovery is also due to China's relatively good fundamentals, such as savings and foreign-exchange reserves, but the government's efforts have been even more important. Morgan Stanley said the government's aggressive policy response, after a hard landing in the fourth quarter of 2008, had curbed the depth of the cyclical downturn, making the economy better than expected in the first quarter.　　For example, with expansionary monetary policy, both the money supply and loan growth in March hit record highs, rising 25.5% and 29.8% respectively in the first quarter of 2009, and 4.6 trillion trillion yuan in new loans in the second half of the year, almost 3.5 times times that of the same period, and 93% of the annual loan in 2008. While pursuing easy monetary policy, the Chinese government has also launched an aggressive fiscal policy.　　Investment in new projects has surged, driven by large-scale infrastructure investments.　　The strong fiscal stimulus of the Chinese government, and the introduction of a range of industry development plans, have not only given investors great confidence, but have given economists ample reason to raise the outlook for China's economy. After entering April, international investment institutions such as Goldman Sachs, Morgan Stanley, UBS and Citigroup have all raised their prospects for China, the most aggressive of which is Merrill Lynch, which has raised its expected economic growth rate to 8% per cent in 2009 years.　　In fact, this is the goal that the Chinese government wants to achieve. "We initially expected the Chinese economy to dip first and then rebound in 2009," he said. "Wang explained the logic of increasing China's economic growth expectations," but we now believe that as negative developments in the first quarter of 2009 were smaller than expected, and that the government's policy response exceeded expectations, the economic recovery would accelerate and be stronger, giving us reason to increase overall growth forecasts. "At first glance, the Chinese economy seems to have completely shaken off the effects of the international financial turmoil, but investors must not celebrate prematurely."　　After all, it will be a while before the crisis is over. Economists agree that the economic recovery that has emerged since the 2009-year quarter is the result of the government's macro-control. Among the government's stimulus policies, liquidity release is the most important measure.　　But investors also know that the real economic recovery still depends on the recovery of the market itself, the government's efforts may only be a strong heart needle, the main function is to use the multiplier effect, call for early recovery of the market.　　However, the current market also faces a series of unresolved issues. First, although the export sector and other manufacturing sectors have undergone a painful process of inventory, the current international demand for Chinese products is far from restored, so the manufacturing and trade sectors will remain sluggish. "The situation in the United States is also very bad, so we think there will be a surplus in China's manufacturing industry in the short term."　　"Michael Harnett, chief economist at Merrill Lynch Emerging Markets, told our correspondent. Second, the manufacturing slump has sparked a second problem in China--employment. China's labour supply is huge, and the manufacturing sector, which absorbs the most labor, is in a slump, inevitably affecting China's consumption escalation. True, China's current series of data suggests that China's consumption has not been too big a decline.　　But the statistics department and economists also agree that the current consumption boom mainly in cities and towns residents, and the current consumption capacity can only be maintained, it is difficult to stimulate economic growth to a greater effect. Investors also believe that government investment, and industrial development planning, will be able to drive jobs in China, but that must take time.　　So the Chinese economy is likely to continue to struggle for some time in pain. As a result, economists believe that the effects of fiscal stimulus will not begin to emerge until the beginning of the third quarter of 2009. At that time, public investment would spur private investment and consumption to rise together.　　In the meantime, the European and American economies will also rebound in tandem, thus giving the Chinese economy greater support.　　But can the developed world really help China out of the crisis?　　When will the international economy revive? The Chinese government's strong fiscal capacity over the past few years has determined that China's policy interventions are stronger than those in the West.　　In addition, China's better economic fundamentals have also determined that China can recover earlier than Western countries. "While China may enter a recovery cycle earlier than the European and American economies in 2009, it is unlikely that China will prosper independently of the global economy."　　Said David Rosenberg, chief economist at Merrill Lynch in North America.　　So if China wants to sustain economic growth in 2010 and beyond, it must hope for economic recovery in the international economy, especially in the developed world. Morgan Stanley's global economic research team expects the US and eurozone to achieve positive GDP growth in the fourth quarter of 2009.　　In other words, the international economy will start a weak recovery by the end of 2009. But economists ' predictions are based on data and experience, so no one can guarantee that the economy will recover exactly at that point in time. Wang Qing, also from Morgan Stanley, wrote in the report, "It is not known whether the G3 economy can achieve the full recovery described above under the current node." "If the international economy recovers, then it is great news for China, especially the export sector," he said.　　Because that means that in the past few years, the engine that has spurred China's economy to move on can be launched. But if the US, EU and Japan fail to recover in 2010, the Chinese government is likely to raise its stimulus again in 2010, in order to maintain its hard-won growth targets. "We expect China's fiscal deficit to be 3% of GDP by 2009, and if the same fiscal stimulus is to be achieved in 2010 years, the fiscal deficit will account for 6% of GDP." He predicts that, even if the cost is staggering, the Chinese government must be reluctant to assume the worst, "because ifWith the Chinese government not having a huge policy stimulus package and the G3 economy failing to recover, the stimulus-fuelled recovery seen in 2009 will not last until 2010. ”