(Source: Xinhua News Agency Outlook Think Tank 2020-04-20)
The economic recovery is still structural. It is highly likely that domestic demand will pick up in the next few months, while external demand will continue to be sluggish. The manufacturing industry may recover quickly, but the recovery of the traditional service industry will still take time.
According to the latest data released by the National Bureau of Statistics, my country's gross domestic product (GDP) in the first quarter of 2020 was 20,650.4 billion yuan, a year-on-year decrease of 6.8%. Overall, in the context of the global epidemic, this data is in line with the market expectations of domestic and foreign institutions and the industry. Among them, the added value of the primary industry was 1,018.6 billion yuan, down 3.2%; the added value of the secondary industry was 7,363.8 billion yuan, down 9.6%; the added value of the tertiary industry was 12,268 billion yuan, down 5.2%. What needs to arouse our vigilance is that the decline in industry exceeds that of the service industry, and the decline in domestic demand exceeds that of external demand. But we still remain confident that economic indicators have stopped falling in March, and the economic effects of resuming work and production will appear in the coming months. From a horizontal comparison, China's economic fundamentals are far better than those of developed economies. However, the economic recovery is still structural. It is highly likely that domestic demand will pick up in the next few months, while external demand will continue to be sluggish. The manufacturing industry may recover quickly, but the recovery of the traditional service industry will still take time.
The growth rate of the secondary industry has declined more than that of the tertiary industry
In the first quarter, the decline in the added value of the primary industry was mainly due to the impact of African swine fever. The total output value of the livestock industry fell by 10.6%. Agricultural production capacity was not significantly affected by the epidemic. The added value of agriculture in the first quarter increased by 3.5% year-on-year. Winter wheat, which accounts for more than 90% of the summer grain, is currently growing well. Egg production and milk production increased by 4.3% and 4.6% respectively. Pig production capacity is also gradually recovering, and the number of livestock in the first quarter has reached 321.2 million. It can be seen that, in general, the primary industry has been less affected by the epidemic, production capacity has gradually recovered, my country's basic people's livelihood has been guaranteed, and agricultural production has run smoothly. The secondary industry was greatly affected by the Spring Festival holiday and the epidemic, and there were many delays in resuming work in January and February. According to data released by the National Bureau of Statistics, the added value of large-scale industries nationwide showed a downward trend in the first quarter. With the improvement of the domestic epidemic situation and the acceleration of the resumption of work and production, the decline in the added value of large-scale industries narrowed by 12.4 percentage points in March. It can be seen that as the epidemic is controlled, the decline in production capacity slows down. It is worth noting that driven by anti-epidemic and new infrastructure-related projects, high-tech manufacturing continued to grow in the first quarter. In March, high-tech manufacturing increased by 8.9% year-on-year. Computers, communications, robots and other industries are becoming the growth poles of the secondary industry. To a certain extent, this shows that high-tech products are still in short supply during the epidemic. The tertiary industry has its own heterogeneous characteristics, with direct contact between producers and consumers and high mobility of personnel. Therefore, anti-epidemic measures such as city closures have a greater impact on it. In the first quarter, the added value of the tertiary industry fell by 5.2%. With the recent improvement of the epidemic, market confidence has gradually recovered. The decline in the national service industry production index in March narrowed by 3.9 percentage points from January to February. The service industry business activity index rebounded by 21.7 percentage points from February. The service industry business activity expectation index rebounded by 17.1 percentage points from February. Market confidence has increased.
Domestic demand is declining faster than external demand
In the first quarter, total retail sales of consumer goods fell by 19.0% year-on-year, national fixed asset investment (excluding rural households) fell by 16.1% year-on-year, and total import and export fell by 6.4%. The decline in consumption and investment was greater than that of w88, and domestic demand fell faster than external demand.
In terms of consumption, due to the impact of the epidemic, social distance has gradually expanded, crowd gatherings have decreased, the catering industry has declined, and online shopping has grown significantly. Catering revenue fell by 44.3% in the first quarter, while the proportion of online retail of physical goods in the total retail sales of consumer goods continues to increase, and the anti-epidemic advantages of online retail have gradually become prominent. At the same time, consumer prices across the country continued to rise. Among them, the price of food, tobacco and alcohol increased the most year-on-year, at 14.9%. Among food, tobacco and alcohol, the price of pork increased by 122.5%, continuously pushing up the national consumer price. With the recovery of primary industry production capacity and the stable supply of the market, the increase in national consumer prices slowed down in March, 0.9 percentage points lower than in February, and consumer prices fell back. In terms of investment, infrastructure investment fell by 19.7% in the first quarter, manufacturing investment fell by 25.2%, and real estate development investment fell by 7.7%. However, with the steady advancement of key epidemic prevention projects in the context of the new crown epidemic, investment in high-tech service industries related to medical and anti-epidemic maintained growth and became a key force driving investment. In terms of w88, affected by the epidemic, countries have blocked their borders, imports and exports have been blocked, and the contribution of foreign w88 to my country's economic growth has declined. The situation is relatively severe. After experiencing a heavy setback in January and February, the decline slowed down in March. The total value of imports and exports was 2.45 trillion yuan, a decrease of 8.7 percentage points from January to February, and the performance of imports was generally better than that of exports.
Future prediction: The recovery of the secondary industry is accelerating, and the domestic market potential continues to be released
As the epidemic spreads around the world, Europe and the United States have successively become the hardest-hit areas of COVID-19. As of April 17, there have been more than 2.11 million confirmed cases of COVID-19 outside China, and a total of 670,000 confirmed cases in the United States. Factories have closed, logistics has been disrupted, unemployment has increased sharply, and the economy has shut down. Although my country has a sound industrial system and production capacity has gradually recovered, it will be difficult for my country to be immune in the foreseeable future months.
From an industrial perspective, the primary industry is less affected by the epidemic, and production capacity is expected to gradually recover; the secondary industry has a fixed labor force and relatively standardized production, so epidemic prevention and control is relatively simple, and the industry is expected to accelerate recovery; the tertiary industry is mostly heterogeneous industries, with high personnel mobility and small social distance. The epidemic is difficult to prevent and control, and consumers themselves will be more scrupulous. Therefore, it is expected that low market demand will still severely restrict the recovery of the service industry, and non-productive service industries such as hotels, restaurants, and movie theaters will still be the "hardest hit areas." However, service industries such as online services and cross-border services in the tertiary industry that do not require direct personal contact or have less personal contact are expected to accelerate their recovery and rebound because there is no pressure to prevent the epidemic.
Next, our country should speed up the establishment of an economic and social operating order that is compatible with epidemic prevention and control, and speed up the process of resuming work and production. On the consumption side, continue to stimulate demand through the issuance of policy subsidies such as consumer coupons and promotional activities; on the investment side, the government should implement foreign investment laws, improve the business environment, use new infrastructure investment as a driving force, promote the implementation and docking of major projects, and cultivate new development momentum; on the w88 side, accelerate China-EU BIT negotiations, properly handle Sino-US relations, continue to promote w88 with emerging economies such as ASEAN, and stabilize the basic foreign w88.
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