The main contradiction in the current economy is the insufficiency of domestic effective demand.

In the next phase, it is necessary to increase the intensity of macroeconomic regulation and implement and refine various policy measures.

On August 15th, the National Bureau of Statistics announced the macroeconomic operation situation in July.

The data shows that on the demand side, from January to July, the national fixed asset investment increased by 3.6% year-on-year, with the growth rate falling by 0.3 percentage points compared to the first six months.

In July, the total retail sales of consumer goods increased by 2.7% year-on-year, with the growth rate accelerating by 0.7 percentage points compared to the previous month.

On the supply side, the added value of the industrial sector above a designated size increased by 5.1%, with the growth rate falling by 0.2 percentage points compared to the previous month.

In terms of foreign trade, in July, the total value of goods imported and exported was 3,675.8 billion yuan, a year-on-year increase of 6.5%, accelerating by 0.7 percentage points compared to the previous month.

Advertisement

Among them, exports were 2,138.9 billion yuan, increasing by 6.5%; imports were 1,536.9 billion yuan, increasing by 6.6%.

The trade surplus was 601.9 billion yuan after deducting imports from exports.

In terms of employment, from January to July, the national urban surveyed unemployment rate averaged 5.1%, a decrease of 0.2 percentage points compared to the same period last year.

Affected by seasonal factors, the national urban surveyed unemployment rate in July was 5.2%, an increase of 0.2 percentage points compared to the previous month, and a decrease of 0.1 percentage points compared to the same month last year.

Many experts have said that the characteristic of insufficient domestic demand in July is still prominent, and at the same time, affected by weather, the production rhythm has slowed down, and the internal momentum of the domestic economy still needs to be improved.

At present, the foundation for economic recovery still needs to be consolidated, and the problems of insufficient total demand and weak expectations still exist.

Insufficient domestic demand and unstable expectations are also reflected in the financial data of July.

On August 13th, the central bank released the financial data for July, and both the new social financing and loan data were weaker than market expectations.

The new social financing scale in July was 770.8 billion yuan, lower than the market expectation of 1,021.6 billion yuan, and an increase of 234.2 billion yuan year-on-year; the new scale of RMB loans from financial institutions was 260 billion yuan, lower than the market expectation of 456 billion yuan, and a decrease of 85.9 billion yuan year-on-year.

Luo Zhiheng, the chief economist and dean of the research institute of Guangdong Kai Securities, said that the overall financial data in July was relatively weak, reflecting that the current economic recovery and upward trend still needs to be further consolidated and strengthened.

The expectations and confidence of residents and enterprises are relatively weak, the willingness to actively expand credit is low, the motivation to increase debt for consumption and investment is insufficient, and the increase in financing demand mainly comes from the government's leverage.

The main contradiction in the current economy is the insufficiency of domestic effective demand, and there is pain in the transformation of old and new momentum.

To promote the economic recovery and upward trend and boost the confidence of micro-entities, policies need to continue to exert force and be more powerful, which means that the focus of monetary policy will further tilt towards stable growth.

Insufficient effective demand, "hot exports, weak consumption".

An important new statement was made at the Central Political Bureau meeting held on July 30th: "Domestic effective demand is insufficient, and the operation of the economy shows differentiation."

Industry experts analyzed that "hot exports, weak consumption" is one of the manifestations of economic differentiation.

This situation is also more obvious in the economic data of July.

In July, the total retail sales of consumer goods increased by 2.7% year-on-year, with the growth rate accelerating by 0.7 percentage points compared to the previous month.

Since the second quarter of this year, the consumption growth rate has shown a significant decline.

In April, May, and June, the total retail sales of consumer goods increased by 2.3%, 3.7%, and 2.0% year-on-year, respectively.

Among them, the growth rate in April slowed down by 0.8 percentage points compared to March (3.1%), and the growth rate in June slowed down by 1.7 percentage points compared to May, lower than the market expectation of 4%, and the growth rate reached a new low since 2022.

Insufficient demand has also led to a decline in production and supply data.

In July, the added value of the industrial sector above a designated size increased by 5.1% year-on-year, falling by 0.2 percentage points compared to the previous month; the growth rate was 0.35% month-on-month.

Data from the National Bureau of Statistics shows that in April, May, and June, the added value of the industrial sector above a designated size increased by 6.7%, 5.6%, and 5.3% year-on-year, respectively, indicating that industrial production has declined for three consecutive months since the second quarter.

Zhang Liqun, a researcher in the Department of Macroeconomic Research of the Development Research Center of the State Council, said that this indicates that under the pressure of insufficient orders, production is developing towards convergence.

The export data performed well.

In July, the total value of goods imported and exported was 3,675.8 billion yuan, a year-on-year increase of 6.5%, accelerating by 0.7 percentage points compared to the previous month.

Among them, exports were 2,138.9 billion yuan, increasing by 6.5%; imports were 1,536.9 billion yuan, increasing by 6.6%.

Since the beginning of this year, exports have been relatively strong.

The data shows that the net export in the first quarter drove the GDP growth by 0.8 percentage points, accelerating by 1.4 percentage points compared to the whole year of last year.

The marginal benefit of exports has improved, becoming the main support for the GDP performance exceeding expectations in the first quarter.

Since the second quarter, the export growth rate has continued to rebound.

In US dollars, the export amount in June increased by 8.6% year-on-year, with the growth rate expanding by 1.0 percentage points compared to the previous month, reaching the highest growth rate since April 2023.

Wen Bin, the chief economist of China Minsheng Bank, said that the continuous rebound of the export growth rate has a strong driving effect on manufacturing investment and industrial production, providing support for the subsequent economic recovery and upward trend.

Manufacturing investment remains high, and the three major investments play a major role in the differentiation of economic operation.

From January to July, the national fixed asset investment (excluding farmers) was 28,761.1 billion yuan, a year-on-year increase of 3.6%, falling by 0.3 percentage points compared to January-June; excluding real estate development investment, the national fixed asset investment increased by 8.0%.

Among the three major investments, manufacturing investment continued to play a major role, among which, infrastructure investment increased by 4.9% year-on-year, manufacturing investment increased by 9.3%, and real estate development investment decreased by 10.2%.

Since the beginning of this year, manufacturing investment has remained high, leading the three major investment sectors.

From January to June, manufacturing investment increased by 9.5% year-on-year, with the growth rate being 5.6 percentage points higher than the total investment; the contribution rate to the total investment growth was 57.5%, an increase of 5.2 percentage points compared to the first quarter.

Manufacturing is the main battlefield for the development of new quality productivity.

At present, the transformation and upgrading trend of China's manufacturing industry towards "new" and "green" is obvious.

In July, the investment in high-tech industries increased by 10.4% year-on-year, among which the investment in high-tech manufacturing and high-tech service industries increased by 9.7% and 11.9%, respectively.

Among high-tech manufacturing industries, the investment in aircraft, aerospace, and equipment manufacturing, and computer and office equipment manufacturing increased by 37.7% and 10.8%, respectively.

Among high-tech service industries, the investment in professional technical service industry and e-commerce service industry increased by 25.4% and 17.9%, respectively.

Industry experts said that from the industrial level, the differentiation between traditional industries and emerging industries is becoming increasingly obvious.

Traditional manufacturing industries, such as steel, coal, and other industries, are in difficulty against the background of overcapacity, increased environmental protection pressure, and weak market demand.

Taking the steel industry as an example, due to the oversupply in the market, the price of steel has been low, and many steel enterprises are facing losses, and have to carry out asset restructuring and structural transformation.

However, emerging industries, such as new energy, artificial intelligence, biomedicine, and others, are showing a vigorous development trend, becoming a hotbed for the breeding of "gazelle" enterprises and "unicorn" enterprises.