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In the macro data of December, industrial production, fixed asset investment and retail sales showed a general decline, and export growth was also unsatisfactory. The Chinese economy reappeared. The author believes that the third quarter of 2013 is the peak of this short-term growth, followed by a moderate economic correction. The policy of “guaranteeing stability†before the Third Plenary Session has given way to “promoting reformâ€.
If you think that reforms can happen without affecting growth and investment, you are too naive. Under the wave of anti-corruption, the top managers of state-owned enterprises are worried that their black-and-white hats will be more than corporate development. Under the financial reform and liquidity contraction, local infrastructure construction will naturally slow down. The author believes that the fixed asset investment in 2014 is bound to slow down. This is the price of reform and the cost that must be paid.
The rapid recovery of the global economic recovery has made many people more optimistic about exports. In fact, in addition to some personal consumption in the United States and a little public spending in China, global demand is not strong. The acceleration of global growth is due to the near-final financial contraction in developed countries and the weakening effect on the economy. The decrease in growth can make GDP growth rebound, but the demand behind it may not grow much.
At present, the market generally predicts that China's economic growth will be 7.8% in 2014. The author believes that this goal is not easy to achieve. The reform will have a short-term negative impact on short-term investment and consumption; the liquidity contraction of the People's Bank of China has caused monetary tightening and capital costs to rise; local governments have entered the peak of debt repayment; wage growth is slowing down. These have a negative impact on short-term growth.
Of course, the risk of a hard landing for the Chinese economy does not seem to be large at present. After all, the housing market is hot and consumption is not weak (only online shopping activities are insufficiently reflected in statistics). The government also has room to introduce further stimulus measures. Only the current government pays more attention to the fiscal and monetary policies under the market mechanism. The threshold for issuing stimulus measures should be higher than that of the previous government.
The author is more inclined to believe that the GDP growth in 2014 is between 7-7.5%, and the growth rate has dropped back to the low level of this cycle. However, the current market is not concerned about the growth rate of 7% or 7.8%. The funds are more concerned about the speed and intensity of reform, and more concerned about how to resolve local debt risks.
Economic growth may slow further in 2014
In the fourth quarter of 2013, China's economic growth was 7.7%, which basically met market expectations. However, this number is affected by the statistical base and so on, and some distortion. Calculated in an economically more accurate annualized rate (annualizedQonQ), the growth rate in the fourth quarter was 7.4%, a significant decline from the 9.1% in the third quarter.