Beijing, August 17 (Xinhua) -- The national economic performance in July is about to be released. As an important observation window for judging the economic trend in the third quarter and the second half of the year, the market is highly concerned about the economic performance in July. From multiple high-frequency data and leading indicators, positive signals have been released in offline consumption, infrastructure, advanced manufacturing and other fields, and the overall economy has maintained stable operation. However, pressure to stabilize growth still exists, and macroeconomic policies still need to be strengthened and improved, focusing on expanding domestic demand and stabilizing growth.

Release of Consumption Potential

Multiple high-frequency data reflect that the economic operation remained stable in July.

Offline consumption is steadily increasing, and bulk consumption is recovering. The offline consumption big data released by the National Information Center shows that the payment amount for various types of consumption in July increased by 2.2% year-on-year, with a growth rate 0.8 percentage points higher than the previous month. Among them, the payment amount for household appliances and audiovisual equipment increased by 8.5% year-on-year, with a growth rate 10.9 percentage points higher than June.

As an important window for observing the temperature of the real economy, the operational vitality of small and medium-sized merchants has increased. High frequency data shows that the "Money Bar" physical business vitality index, which reflects the operating conditions of small and medium-sized merchants, rose to 81.9 in July, an increase of 3.1% compared to the previous month.

Xing Yuguan, Deputy Researcher at the Big Data Development Department of the National Information Center of the National Development and Reform Commission, said, "The most gratifying change in consumption in July is the expansion of the rebound. Offline consumption has steadily increased, and bulk consumption has also rebounded synchronously. Combined with the popularity brought by summer tourism, it has further activated consumption scenes such as major commercial districts, small shops on the street, and community stores, accelerating the release of market potential

Marginal improvement in infrastructure investment. High frequency data shows that the asphalt production rate continued to improve in July, and the cement shipping rate increased year-on-year, indicating a marginal improvement in infrastructure investment such as transportation.

The continuous optimization of investment structure and the accelerated growth of new quality productivity provide important support for high-quality economic development. According to data from the National Information Center, investment in advanced manufacturing increased by 73.1% year-on-year in July, an increase of 42.5 percentage points from June. The winning bid amount for projects related to new infrastructure such as computing power, data, and networks increased by 0.8% year-on-year. In July, the number of patent authorizations related to strategic emerging industries increased by 10.7% year-on-year, among which the number of patent authorizations related to artificial intelligence increased by 60.0% year-on-year, an increase of 21.7 percentage points compared to June.

The investment structure continues to optimize, and market capital actively lays out new quality and productivity related tracks, reflecting the market's confidence in the prospects of industrial upgrading. The intensive emergence of achievements in the field of artificial intelligence provides ample impetus for the transformation of old and new driving forces in the industry, "said Xing Yuguan.

Promote comprehensive recovery of domestic demand

In a complex and ever-changing environment, China's economy has demonstrated strong resilience. However, some leading indicators indicate that the current stable economic growth still faces certain pressure, and effectively expanding domestic demand is the top priority.

From the perspective of production, the level of prosperity in the manufacturing industry has declined. According to data from the National Bureau of Statistics, the Purchasing Managers' Index (PMI) for the manufacturing industry fell to 49.2% in July, a decrease of 1.1 percentage points from the previous month, due to factors such as the high growth base of the manufacturing industry in the early stage and some industries entering the traditional off-season of production. The manufacturing PMI fell in July and returned to the boom bust line, indicating that the downward pressure on the economy has increased. ”Zhang Liqun, a researcher at the Macroeconomic Research Department of the Development Research Center of the State Council, said.

According to Wen Tao, an analyst at the China Logistics Information Center, extreme weather in some regions caused disruptions to the production conditions and logistics transportation of manufacturing enterprises in July. The production activities of these enterprises remained stable and slightly slowed down, resulting in a slight decrease in the production index in July compared to the previous month. However, the index is still close to the critical point of 50%, indicating that China's manufacturing industry has good resilience on the production side and still has a stable operating foundation under extreme weather conditions. In the long run, the trend of production improving has not changed.

From the demand side, both domestic and international demand have slowed down. The new orders index for China's manufacturing industry in July was 48.5%, a decrease of 2.7 percentage points from the previous month, indicating an overall slowdown in demand in the manufacturing market. The impact of seasonal factors on port logistics has become apparent, leading to fluctuations in manufacturing exports. The new export order index in July was 49.6%, a decrease of 0.5 percentage points from the previous month.

We must attach great importance to and quickly reverse the weakening trend of domestic demand, "said Zhang Liqun." We should increase government investment in public goods, enhance corresponding financial and monetary fund guarantees, and significantly expand the physical workload as soon as possible. At the same time, it effectively drives enterprise and social investment, promotes employment and household income growth, and drives a comprehensive recovery of domestic demand.

Wen Tao believes that as the impact of extreme weather subsides, the production capacity and supply chain operations of enterprises in the previously affected areas will return to normal, and market demand will be steadily released; The continued implementation of policies such as "Six Net" and "Two New" will drive effective investment growth and leverage social investment, and continue to empower the transformation and upgrading of the manufacturing industry, promoting long-term expansion and quality improvement of the manufacturing industry. Overall, the domestic market demand for manufacturing will stabilize and rebound in August.

Macro control is expected to be intensified

Listening to string music reveals elegance. A series of policy signals recently released indicate that efforts will be made to expand domestic demand, support stable economic growth, and macroeconomic regulation is expected to be intensified.

Monetary policy is expected to take the lead. The meeting of the Political Bureau of the Communist Party of China Central Committee held on July 30th emphasized the comprehensive use and timely adjustment of monetary policy tools to optimize the implementation of fiscal and financial policies to promote domestic demand. The latest Q2 monetary policy implementation report released by the People's Bank of China clearly outlines the timely development of practical and effective incremental policies for Taiwan, increases efforts in countercyclical adjustment, strengthens the expansion of domestic demand, optimizes supply, and promotes the sustained development of the economy towards a new and better direction. Comprehensively utilize and adjust monetary policy tools in a timely manner to maintain sufficient liquidity and relatively loose social financing conditions.

The third quarter is an important window to observe the adjustment of monetary policy, "said Zhang Di, Chief Macro Analyst of Galaxy Securities. Considering the current multiple objectives of monetary policy, there is room for moderate easing of monetary policy, and reserve requirement ratio and interest rate cuts are worth looking forward to; In addition, there will be a peak in government bond issuance in the third quarter, and monetary policy is expected to coordinate with fiscal policy. 800 billion yuan of new policy financial instruments are expected to accelerate their implementation in the third quarter.

Fiscal policy will be more proactive. On the one hand, the progress of fiscal expenditure and bond fund utilization will accelerate. Zhao Zeyong, Deputy Director of the Debt Management Department of the Ministry of Finance, recently stated that in the next step, the Ministry of Finance will better coordinate the use of funds and project construction, accelerate the progress of fund disbursement and utilization, and quickly form physical workload. On the other hand, incremental measures are expected to be introduced. Finance Minister Lan Fo'an recently published a signed article in People's Daily proposing to promote the coordinated and coordinated development of fiscal and monetary policies, and actively introduce policies that are conducive to stabilizing growth and expectations.

From the perspective of industrial policies, relevant policies to promote the development of new quality productivity are expected to be introduced. Wang Weiming, Chief Engineer of the Ministry of Industry and Information Technology, stated that future industries have forward-looking, strategic, and disruptive characteristics, and require a scientific grasp of the development pace and proactive planning and layout. The Ministry of Industry and Information Technology will urgently study and formulate policies for the development of key tracks, clarify cultivation goals and development directions, and make dynamic adjustments based on the development of industries. At present, segmented policies have been introduced around multiple tracks, and a batch of new policies are also being intensively formulated.

Editor: Yin Yang

(Author Xinhua Finance)