JPMorgan's director and general Manager Jing Ulrich: The consumer market will be the new engine of economic growth

From the recent published macro-statistics, the Government's macro-control policy has led to positive changes in China's economy, and the current focus of the industry is: how China's economic growth will be boosted in the second half.　　A recent report by Ms Ulrich, JP Morgan's managing director, said that the Chinese economy as a whole "vibrant domestic demand, weak external demand" will continue, the consumer market will become the new engine of economic growth. Ms Ulrich says there are three reasons for the rapid recovery in China's consumer demand. First, the recovery of asset markets has led to domestic consumption power. China's economy has been recovering from a massive fiscal stimulus this year, with significant economic fundamentals improving. Most of the economic data have shown significant improvement since March. China's stock market has become the world's brightest market in policy benefits, and since the beginning of the year, China's a-shares have risen nearly 80%, the most prominent in the world. In the real estate market, data show that in recent months, market turnover in some major cities has increased steadily, and many regions have even exceeded the 2007 level. The vigorous development of the capital market has driven the domestic consumption to a great extent, and has stimulated the residents ' consumption psychology positively, which also makes the market form virtuous circle.　　At the same time, the development of capital market is bound to raise people's inflation expectations, a certain level of inflation expectations can play a role in stimulating consumption. Second, the impact of policy on the consumer market is direct and effective. Overall, the improvement of the end consumer market environment is inseparable from the government's targeted stimulus policy. The growth in passenger car sales, for example, has benefited from the government's policy of reducing the purchase tax on small-footprint vehicles. The May executive meeting of the State Council decided that the use of financial subsidies, to encourage cars, home appliances "to replace the old", the central government this year, the old auto scrap update subsidy from 1 billion yuan to 5 billion yuan, and arrange 2 billion yuan for home appliances "old for new" subsidies, local government also issued "home appliances to the countryside" and other promotional policies. The implementation of these policies will further stimulate the demand for household consumer goods markets. Under the policy stimulation, May retail sales real growth 16.6%, the consumption growth rate has rebounded for three consecutive months, the automobile production and sales continuously three months ultra millions, creates the historical record, January-May commercial housing sales area and the sales growth respectively year-on-year increase 25.5% and 45.3%.　　This not only embodies the remarkable effect of policy, but also shows that the sensitivity of consumption to policy stimulation is very high. Finally, the residents ' confidence in economic development is an important factor in sustaining consumption activity. The recovery of the economy, the stock market and the real estate market are, above all, a revival of investor confidence, which will have a stronger market-driven role than any specific figure, such as fiscal stimulus or the number of new loans. At present, China's social security system is not mature, but the government in the implementation of a series of measures to promote consumption, but also improve the social security system, accelerate social security, health care, education reform, and further balanced development. And state-owned shares will greatly improve the future benefits of Social Security Fund. The best way to boost domestic demand isTo improve social security, if China's social security system is further improved, people will be more confident to spend.　　It is worth noting that not only the increase in the total consumption, Jing Ulrich predicts that in the next 10 years, China's household consumption in the proportion of GDP will be significantly increased. China's household consumption income accounted for only 35% of China's GDP in 2008, compared with 71% in the United States and more than 50% in the major developed countries. The global financial crisis has led to a sharp contraction in international market demand, which has also led to the country's sharpest trade contraction in more than 10 years, and has made the Chinese government acutely aware of the inadequacy of the economy's reliance on exports. However, the Chinese government's active fiscal policy and moderately loose monetary policy have effectively stimulated the domestic consumer market, promoted the economic growth and steadily stabilized. China's household deposits are huge, up to 25 trillion in May this year, up 29% per cent year-on-year, with huge consumer potential.　　We believe that the Government, while promoting domestic demand through short-term and effective policies, will also focus on long-term economic goals, accelerate the improvement of social security system, and thus fundamentally promote domestic demand development and stimulate the economy. (Trainee reporter Chen Ziling finishing)