the fed's interest rate cut cycle will bring more room for my country's monetary policy, but the overall policy will still be "self-centered"丨china business news chief economist survey
2024-09-09
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summary
september 2024,the "first financial chief economist confidence index" released by the first financial research institute is 49.96.slightly below the 50 boom-bust line. economists believeunder the influence of internal and external disturbances, my country's economic recovery is still under pressure, and further policies to stabilize the economy are needed to restore effective demand.
kpmg's cai wei said,various economic data since the third quarter have shown that the current economic operating pressure remains high.
data released by the national bureau of statistics on september 9 showed that the year-on-year growth rate of cpi in august was 0.6%, and the year-on-year growth rate of ppi was -1.8%, which was lower than the expectations of chief economists. the average forecast of economists for the cumulative growth rate of fixed asset investment was 3.58%, the average forecast for the year-on-year growth rate of total retail sales of consumer goods was 2.61%, and the average forecast for the year-on-year growth rate of industrial added value was 4.77%. their average forecast for my country's trade surplus in august was us$81.501 billion.
lian ping, chief industrial researcher at guangkai, said:investment will maintain steady growth in the third quarter, especially manufacturing investment will grow rapidly to offset the downward trend in real estate investment.
economists expect august financial data to be higher than last month. their average forecast for new loans is 1,018.75 billion yuan, their average forecast for total social financing is 2.84 trillion yuan, and their average forecast for year-on-year growth of m2 is 6.26%. in the survey, 10 economists gave forecasts for the deposit reserve ratio and lpr interest rate levels of large financial institutions in the next month, of which 30% of economists expect that the deposit reserve ratio and lpr interest rate levels may be lowered by the end of september.
lu ting of nomura securities said,the upcoming series of interest rate cuts in the united states provides my country with an opportunity to cut interest rates.
on august 30, 2024, the central parity rate of the rmb against the us dollar was 7.1124 yuan. economists expect the central parity rate of the rmb against the us dollar to rise to 7.08 by the end of september, and they adjusted their forecast for the rmb against the us dollar at the end of the year from 7.03 at the end of last month to 6.99.
in this survey, economists analyzed the impact that the arrival of the us interest rate cut cycle will have on my country's economy and finance.the us interest rate cut will bring about certain changes to my country's external economic environment and provide my country's monetary policy with greater room for maneuver, but the overall policy will still be "based on china."
wang han of industrial securities believes thatchanges in the external monetary policy environment will have some impact on domestic monetary policy, but will certainly not be the main factor.
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1. confidence index: the confidence index in september was 49.96
published by china business news research institutethe "first financial chief economist confidence index" in september was 49.96.slightly below the 50 boom-bust line. economists believe thatunder the influence of internal and external disturbances, my country's economic recovery is still under pressure, and further policies need to be introduced to restore effective demand.
kpmg's cai wei said,various economic data since the third quarter show that the current economic operation pressure is still great. in august, the manufacturing pmi accelerated its decline, and the production, demand and price indexes were all running in the contraction range. the drag of insufficient effective demand continued to appear, and the problem of domestic supply and demand imbalance remained prominent. at the same time, the global economic prosperity declined, and there was also a risk of marginal slowdown in external demand. in contrast, the non-manufacturing pmi rebounded slightly, supported by the recovery of the service industry driven by summer consumption, but the construction industry's prosperity slowed down for four consecutive months due to the slow infrastructure construction and the sluggish real estate. with the end of the holiday, the sustainability of the expansion of the non-manufacturing boom remains to be seen.
li wenlong from huanya digital economy research institute believes thatthe current market still has the problem of insufficient investment confidence, and further effective measures need to be taken to improve the business environment. the efficiency improvement brought by artificial intelligence is accelerating the change of the employment market and structure. employment mismatch and the structural adjustment caused by it need to be taken seriously, and the application of artificial intelligence needs to be balanced between capital, society and individuals.
cheng shi from icbc international said,looking ahead to the fourth quarter of 2024, china's economy is expected to continue to move forward steadily along the track of recovery. against the backdrop of sluggish global economic growth and an increasingly complex external environment, macroeconomic regulation may adopt a more flexible and diversified policy mix to cope with various challenges. during this period, the focus of economic policies is expected to be more focused on the main line of "benefiting people's livelihood and promoting consumption". with the issuance of 150 billion yuan of ultra-long-term special treasury bond funds, local governments will be able to better support consumer goods trade-in projects and further consolidate the basis for the recovery of the consumer market. at the same time, various policies aimed at increasing residents' income and enhancing consumption willingness will also be gradually implemented within the year, which will provide strong support for the steady growth of the consumer market in the fourth quarter. in addition, the accelerated issuance of special bonds and ultra-long-term treasury bonds will be transformed into tangible workload and investment results, injecting new momentum into areas such as infrastructure construction. supportive monetary policy will create a stable and favorable financial environment for the continued recovery of the economy.
2. objectsprice: the cpi in august was 0.6% year-on-year, and the ppi was -1.8% year-on-year
data released by the national bureau of statistics on september 9 showed that cpi rose 0.4% month-on-month and 0.6% year-on-year in august, lower than economists' expectations of 0.65%; ppi fell 0.7% month-on-month and 1.8% year-on-year, lower than economists' expectations of -1.39%.
3. total retail sales of consumer goods: the average growth rate forecast for august is 2.61%
the average predicted year-on-year growth rate of total retail sales of consumer goods in august is 2.61%.among them, the maximum forecast value of 4% came from ding shuang of standard chartered bank, while cai wei of kpmg and wu ge of changjiang securities gave the minimum forecast value of 2%.
wen bin from minsheng bank said,in august, summer travel and the "olympic fever" drove the continued rise in consumption of cultural, sports, business and tourism integration, and the national policy of doubling the scrapping and renewal subsidies boosted the car market. however, considering the impact of the increased base last year, it is expected that the growth rate of total retail sales of consumer goods will remain basically the same as last month's 2.7%. from the perspective of major commodities, the business activity indexes of railway transportation, air transportation, postal services, culture, sports and entertainment industries related to residents' travel and consumption are all in a high prosperity range of more than 55%, and the business activity indexes of accommodation, catering and scenic spot service-related industries are all above 50%; from august 1 to 25, the retail sales of passenger cars increased by 5% year-on-year and 9% month-on-month. however, data from the china index academy showed that the property market continued to cool down in august, which is not conducive to the growth of real estate-related consumption.
iv. industrial added value: the average growth rate forecast for august is 4.77%
the survey results show thatthe average forecast for the year-on-year growth rate of industrial value added in august is 4.77%.among them, ding shuang of standard chartered bank gave the minimum value of 4%, while wu ge of changjiang securities and wang han of industrial securities gave the maximum value of 5.2%.
lu zhengwei of industrial bank said,in august 2024, the operating rates of major industrial products diverged. rebar continued to be disturbed by the national standard switch, and crude steel output weakened; tire operating rates continued to fluctuate, and the trend of semi-steel tires being better than full-steel tires continued, but the gap narrowed; the operating rates of the pta industry chain diverged, with the upstream operating rate continuing to rebound while the mid- and downstream operating rates fell; real estate data performance was still relatively weak. taking into account the impact of last year's base, the number of working days and this year's special weather, the industrial added value in august may drop by 0.5 percentage points year-on-year compared with the previous month.
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best forecast economists' forecast for july 2024 august forecast (industrial value added year-on-year):
cheng shi: 5%
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5. fixed asset investment growth rate: the average forecast is 3.58%
economiststhe average forecast for the growth rate of fixed asset investment in august is 3.58%.this is slightly lower than the published data of 3.6% last month. among them, zhang jun of galaxy securities and cheng shi of icbc international gave the highest value of 3.9%, while cai wei of kpmg, zhou xue of mizuho securities and lu zhengwei of industrial bank gave the lowest value of 3.4%.
lian ping, chief industrial researcher at guangkai, said:investment will maintain steady growth in the third quarter, especially manufacturing investment will grow rapidly, offsetting the decline in real estate investment. factors such as export growth, science and technology innovation policies, equipment renewal and old-for-new, and financial support in the third quarter will promote the continued rapid growth of the manufacturing industry. manufacturing production and investment will be the biggest highlight of the economy in the third quarter. but at the same time, it should be noted that since the beginning of this year, the weakness in investment, consumption, prices, employment, income, credit, m1, financial management and the stock market has been caused by real estate, in addition to insufficient market confidence and unstable expectations. real estate is the dominant factor in insufficient domestic demand, and the risk of the real estate industry is the main risk to economic operation in the short and medium term.
vi. real estate development investment: the average growth rate forecast for august is -10.26%
the survey results show thatthe predicted average growth rate of real estate development investment in august is -10.26%.among the economists who participated in the survey, zhang jun of galaxy securities gave the highest value of -9.9%, while lian ping, chief industrial research institute of guangkai, lu ting of nomura international, xie yaxuan of china merchants securities and cai wei of kpmg gave the lowest value of -10.4%.
wen bin of china minsheng bank predictsthe decline was the same as the 10.2% from january to july. he said that in august, the transaction area of commercial housing in 30 large and medium-sized cities was 7.19 million square meters, falling for two consecutive months, and the year-on-year decline widened from 16.5% in the previous month to 24.3%; the transaction area of land in 100 large and medium-sized cities was 49.65 million square meters, turning from -21.4% to an increase of 11.5% year-on-year. the policy effect continued to fade, the transaction volume of new and second-hand houses in the market tended to decline, the willingness of enterprises to acquire land improved slightly, and the overall market was still in the process of finding a bottom.
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best forecast economist's september forecast for august 2024 (cumulative growth rate of real estate development investment year-on-year):
cai wei: -10.4%
lianping: -10.4%
xie yaxuan: -10.4%
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vii. foreign trade: the average forecast for the trade surplus in august is us$81.501 billion
economists predictmy country's trade surplus in august will be revised down to us$81.501 billion from the published data of us$84.65 billion last month.they arethe average year-on-year forecasts for imports and exports are 6.94% and 2.59% respectively.
lu zhengwei of industrial bank said,the global recovery is slowing down and the low base effect is weakening. the year-on-year export reading in august may fall from the previous month. from the perspective of external demand, the manufacturing pmis of the united states and the eurozone fell by 1.6 and 0.2 percentage points from the previous month to 48.0% and 45.6% respectively in august, both of which were the lowest in the past eight months. the decline in the manufacturing boom in developed economies may drag down global demand. from the perspective of the base effect, exports in august 2023 increased by 1.1% month-on-month, the second highest since the same period in 2019. the weakening of the low base effect will also suppress the year-on-year export reading. combined with shipping indicators, as of august 28, my country's export container index fell 16.5 points from the previous month to 2091.1 points in august. during the same period, the shanghai export container freight index fell 358.4 points from the previous month to 3241.4 points, the lowest since may 2024. the decline in the freight index also indicates a decline in demand for export goods. at the same time, the higher base and the decline in commodity prices may cause the year-on-year import reading in july to fall from the previous month. from the base effect, imports in august 2023 increased by 7.6% month-on-month, the highest since the same period in 2006. from the perspective of commodity prices, the crb spot index fell by 3.7% year-on-year in august, an increase of 0.1 percentage point from the previous month, which may drag down the year-on-year import reading from the price level. combined with south korea's exports to my country, south korea's exports to my country increased by 16.3% year-on-year in the first 20 days of august, down 4.1 percentage points from the previous month, and my country's import growth from south korea slowed down.
8. new loans: the average forecast for august is 1,018.75 billion yuan
economists predict thatin august 2024, new loans will rebound to 1018.75 billion yuan from the value announced last month (260 billion yuan).in the survey, the smallest value of 650 billion yuan came from cheng shi of icbc international, and the largest value of 130 billion yuan came from wang han of industrial bank securities.
chen xing of caitong securities said,in july 2024, new rmb loans totaled 260 billion yuan, with the year-on-year decrease narrowing to 85.9 billion yuan. the acceleration of bond financing in july led to a year-on-year increase in the scale of new social financing, while rmb loans remained the main drag. since late august, the interest rate on bills has fallen, which may reflect that credit supply is still weak. he expects that the scale of new rmb loans in august will still be lower than the same period last year, and will continue to be a certain drag on social financing.
ix. total social financing: the average forecast for august is 2.84 trillion yuan
the survey results show thatthe average forecast for total social financing in august is 2.84 trillion yuan.this is higher than the data released by the central bank in july (0.77 trillion yuan). among them, lu zhengwei of industrial bank gave the maximum forecast of 3.43 trillion yuan, and lian ping, chief industrial research institute of guangkai, gave the minimum forecast of 1.5 trillion yuan.
10. m2: the average growth rate forecast for august is 6.26%
economists predict thatthe year-on-year growth rate of m2 in august will drop to 6.26% from 6.3% in july.among them, lian ping, chief industrial researcher of guangkai, gave the maximum value of 6.8%, and wu ge of changjiang securities gave the minimum value of 5.8%.
lu zhengwei of industrial bank said,in august, both m1 and m2 are expected to decline year-on-year. in terms of m1, the transaction area of commercial housing in 30 large and medium-sized cities in august recorded a year-on-year decrease of -27.5%. weak new home sales continued to drag down m1, and m1 is expected to remain at a low level. in terms of m2, on the one hand, credit continued to run weakly in august, and the deposit derivative effect put pressure on m2 growth; on the other hand, the scale of net financing of government bonds in august was large, and the large amount of fiscal funds returned may disturb the m2 reading this month. combined with seasonal factors, m2 may decline year-on-year in august.
11. interest rate & deposit reserve ratio: many economists expect that the lpr rate may be lowered in september
in this survey, 10 chief economists gave forecasts for the lpr rate and the deposit reserve ratio of large financial institutions in september.thirty percent of economists expect that both the lpr rate and the reserve requirement ratio of large financial institutions may be lowered this month.
lu ting of nomura securities said,the upcoming continuous interest rate cuts in the united states provide my country with an opportunity to cut interest rates. due to limited space, my country's interest rate cuts will not be large, and should focus on reducing the interest rates of existing mortgage loans. the scale of existing mortgage loans from 2015 to 2022 is about 30 trillion yuan, and the estimated mortgage interest rate is about 5.2%. it has been reduced by 73 basis points and is currently estimated to be 4.5%, which is still about 100 basis points higher than the interest rate level of 3.5% for new mortgages in the second quarter of 2024.
12. exchange rate: the average expected central parity rate of rmb against the us dollar by the end of this year is 6.99
on august 30, 2024, the central parity rate of rmb against the us dollar was 7.1124 yuan.it is expected that the rmb central parity rate against the us dollar will appreciate to 7.08 by the end of september. they adjusted their end-of-year rmb exchange rate forecast against the us dollar from 7.03 at the end of last month to 6.99.
lian ping, chief industrial researcher at guangkai, said:during this round of the fed's interest rate cut cycle, driven by the narrowing of the interest rate gap between china and the united states, the rmb may experience a certain recovery appreciation in the early stage. with the staged rebound of the us dollar index, it is likely that the rmb exchange rate against the us dollar will maintain two-way fluctuations.
13. official foreign exchange reserves: the average forecast at the end of august is us$3274.225 billion
economists arethe average forecast of my country's official foreign exchange reserves at the end of august was us$3274.225 billion.this is higher than the published figure of $3.256 trillion last month.
wen bin of minsheng bank believes thatinflation in the united states fell more than expected in august. at the annual meeting of global central banks, federal reserve chairman powell clearly released a signal of interest rate cuts, saying that he would pay more attention to the cooling labor market. the market once bet on a 50bp interest rate cut in september, which led to a weakening of the us dollar index and an overall increase in global asset prices. in terms of exchange rates, the us dollar index fell by 2.2% month-on-month, and major non-us currencies all rose. the yen, euro, and pound appreciated by 2.6%, 2.1%, and 2.1% against the us dollar respectively. in terms of bond prices, the 10-year us treasury yield fell by 18 basis points month-on-month to 3.91%; the 10-year european bond yield rose by 5 basis points to 2.38%; and the 10-year japanese bond yield fell by 15 basis points month-on-month to 0.92%. in terms of stock prices, the s&p 500 stock index rose by 2.3%, the euro stoxx 50 price index rose by 1.4% month-on-month, and the nikkei 225 index fell by 1.2%. taking into account the impact of exchange rate conversion and asset price changes, it is estimated that foreign exchange reserves will increase by us$25 billion to us$328.13 billion at the end of august compared with the end of the previous month.
14. policy
wu ge of changjiang securities said,looking ahead, the fiscal policy is expected to accelerate the implementation of the established policies. however, the inertia of economic slowdown will continue in the third quarter, and the sharp negative growth of land transfer income is difficult to change in the short term. even if the debt increment tool is launched, the scale and time lag of its effect are still challenging to fill the current demand gap, and a combination of monetary and other policies is urgently needed.
kpmg cai wei believes thatin the next stage, the necessity of increasing policies to expand domestic demand and support the traditional economic momentum will increase. the policy focus may fall on finance, consumption, manufacturing, real estate and other fields. first, the issuance of special bonds accelerated significantly in august, and it is expected that the issuance rhythm will continue to accelerate in september to support the growth rate of infrastructure investment. secondly, the "two new" policies are constantly being implemented, and the boosting effect on consumption and manufacturing investment will gradually emerge; there is also the possibility of further strengthening the real estate stabilization policy. finally, considering the local fiscal and debt pressures, the policy direction of expanding domestic demand may shift to central leverage, and the possibility of issuing more treasury bonds this year cannot be ruled out.
15. hot issues in macroeconomics
on august 23, powell sent a clear signal of interest rate cut at the jackson hole global central bank annual meeting: "the time for policy adjustment has come. the timing and pace of interest rate cuts will depend on subsequent data, changes in outlook and the balance of risks." in this survey, the chief economists analyzed the impact of the arrival of the us interest rate cut cycle on my country's economy and finance. they believe thatthe us interest rate cut will bring about certain changes to my country's external economic environment and provide my country's monetary policy with greater room for maneuver, but the overall policy will still be "based on china."
kpmg's cai wei said,the arrival of the us interest rate cut cycle means that the pressure of interest rate differential between china and the us and depreciation of the rmb exchange rate will be eased, and my country's monetary policy will have greater room for operation. for various sectors of my country's macro-economy, first of all, the us interest rate cut is conducive to releasing global liquidity and easing the downward pressure on the global economy. the rebound in external demand is good for my country's exports and is expected to boost investment and production activities in export-oriented industries. however, the us interest rate cut may lead to the depreciation of the us dollar and the appreciation of the rmb against the us dollar, affecting the export competitiveness of chinese goods, but at the same time it is conducive to reducing import costs and alleviating the burden of foreign debt on enterprises. secondly, the us interest rate cut may push up international commodity prices, put pressure on my country's imported costs, and affect the domestic inflation level and corporate profitability. finally, the us interest rate cut is expected to boost global investor sentiment and promote more international capital to flow into china, which will have many positive effects on china's foreign exchange reserves and domestic capital markets.
li wenlong from huanya digital economy research institute believes thatthe fed's interest rate cut is expected to bring about certain changes to china's external economic environment, including promoting capital repatriation and the gradual appreciation of the rmb, which will help improve the domestic investment environment. however, overall, the country is still facing the main contradiction of insufficient confidence, and further efforts are needed to improve the business environment and promote private investment.
lian ping, chief industrial researcher at guangkai, said:judging from the us inflation, growth, employment, interest rates and other factors, the fed's new round of interest rate cuts is likely to be relatively mild preventive cuts, rather than relief cuts for severe recessions or major external shocks. therefore, the international financial market and the global foreign exchange market may not fluctuate greatly. in the second half of the year, the general tone of my country's monetary policy will remain stable and adjust to easing. if the fed cuts interest rates "as scheduled" in september, the possibility of a rate cut by the people's bank of my country will still exist, and the decline may remain at the level of 10bp.
icbc international cheng shi believes thatwith the gradual implementation of the fed's interest rate cut policy in the future, the global monetary tightening situation is expected to be significantly improved, the risk appetite of the capital market will rise accordingly, and the liquidity of the financial market will be effectively improved. at present, china's inflation level remains at a low level, and the real interest rate is still relatively high, which puts certain pressure on economic growth. in order to meet this challenge, the central bank will continue to adopt a prudent policy stance, while preventing capital idleness and excessive speculation, to ensure that liquidity remains reasonably abundant, so as to provide solid financial support for the steady development of the real economy. looking ahead to the fourth quarter, as the constraints of overseas monetary policy gradually weaken, the countercyclical adjustment of domestic monetary policy is expected to be further strengthened. in this context, the central bank may combine the efforts of fiscal policy to further promote the positive recovery of the economy through interest rate cuts, reserve requirement ratio cuts and other means. in addition, with the continuous enrichment of the monetary policy toolbox, the central bank will use a variety of structural tools more flexibly and accurately, give full play to the policy-oriented role, and further promote the financial system to provide strong support for the high-quality development of the economy and society.
chen xing of caitong securities believes thatif the united states implements an interest rate cut, the first impact is that the interest rate gap between china and the united states will narrow, which provides a wider operating space for the adjustment of my country's monetary policy. second, the us dollar index may weaken, global capital may flow back to emerging markets, and the trend of funds flowing into rmb assets is expected to increase. the entry of new capital will inject new momentum into my country's stock and bond markets, and enhance market liquidity and activity. third, it may have a positive impact on growth stocks. first, the cost of funds will be reduced, and investors' willingness and preference for risky assets will be enhanced; second, growth companies can raise funds at a lower cost to support their research and development and market expansion, and further accelerate development. moreover, a low interest rate environment helps to improve the valuation level of listed companies, which is particularly beneficial to growth sectors that rely on valuation.
wang han of industrial securities believes thatchanges in the external monetary policy environment will have some impact on domestic monetary policy, but it will definitely not be the main factor. the fed's interest rate cut will help expand the room for china's central bank to operate monetary policy. this year, china's economy still faces great pressure to achieve the target of about 5%, and still needs the support and coordination of macroeconomic policies. the central bank can stimulate economic growth by lowering the reserve requirement ratio and interest rates. against the backdrop of the fed's interest rate cut, china may maintain a loose monetary policy and increase fiscal policy to stimulate consumption and investment, thereby supporting economic growth.
the list of 15 economists in this issue of "yicai chief economist monthly survey" (arranged in alphabetical order):
cai wei: chief strategy officer, kpmg china consulting
chen xing: chief macro analyst of caitong securities
cheng shi: head of research, managing director and chief economist, icbc international
ding shuang: chief economist of standard chartered bank greater china
li wenlong: chief economist of huanya digital economy research institute
lian ping: director of guangkai industrial research institute
lu zhengwei: chief economist of industrial bank
lu ting: chief economist of nomura securities china
wang han: chief economist of industrial securities
wen bin: chief economist and director of the research institute of china minsheng bank
wu ge: chief economist of changjiang securities
xie yaxuan: deputy director of research and development center of china merchants securities
zhang jun: chief economist of china galaxy securities
zhou xue: asia economist at mizuho securities
zhu haibin: chief economist of jpmorgan chase china
(source of the title image of this article: china business network)
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author: he xiao, researcher, first financial research institute
(this article comes from china business network)
