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On November 7, the Chinese government website released a video of Li Keqiang’s economic open class at the Central Party School on October 23. This is the third economic open class since Li Keqiang took office as prime minister. What did the Prime Minister say and what important information was conveyed during the one-hour, 42-minute class? Let's take a look at the three main lines that the reporters have organized.
GDP breaks seven: results are hard to come by, and the trend is unchanged
A few days before the opening of this class, the National Bureau of Statistics just announced that the GDP growth rate in the third quarter slowed to 6.9%. The economic growth rate fell below 7%, which made the market worry about the economic downturn.
In this regard, Li Keqiang clearly stated in the open class that "6.9% is the goal. We have never said that the economy will stick to a certain point. 7% is not broken, but hard-won."
Why did Li Keqiang emphasize that the results are hard to come by? There are three main points.
Point one, the results were achieved in such a difficult situation as the international environment. What kind of environment are we in? It is a trade market that is shrinking than the financial crisis of 2007. The growth rate of international trade is only 2% (mainly maintained at around 7% in previous years). The growth rate of major economies is not fast, and the growth rate of emerging economies is relatively low. There is negative growth.
Therefore, it is no better than not knowing that the truth of the fact is that the Chinese economy has maintained a growth rate of around 7%, and its growth rate is still at the forefront of the world's major economies.
The second point is that the score is achieved above the high base of $10 trillion, and the increase is greater than the previous two digits.
“It’s a good performance for all economies with an economic growth of over US$2 trillion and over 2.5%. China’s current growth rate of 1% is equivalent to 1.5% growth five years ago, which is equivalent to an increase of 2.6 years ago. %." Li Keqiang explained.
Therefore, according to this conversion, the current 7% is equivalent to 18% 10 years ago.
The third point is that despite the economic slowdown, the economic structure has undergone positive changes, new economic growth points have accelerated, the employment situation has stabilized, and people's livelihood has continued to improve.
This is very important. In Li Keqiang's view, employment, household income, and environment are all more important indicators than GDP. "As long as employment can continue to grow, people's income can continue to improve, the environment can continue to improve, and GDP growth is lower and higher is acceptable."
He also mentioned that difficulties cannot be underestimated. The external environment is quite severe, and the long-term accumulation of contradictions in the country has also begun to emerge, mainly reflected in the obvious deflationary trend, overcapacity, business difficulties, and financial and financial risks.
Even so, Li Keqiang still believes that confidence in the Chinese economy cannot be shaken. "The current economic situation can be described in such a sentence: there is fluctuations in shape, and the trend is still good."
Macro policy: There is still room for active fiscal policy, and interest rate cuts will continue
Li Keqiang reiterated the macro policy tone in the open class, that is, to continue to implement a proactive fiscal policy and a prudent monetary policy.
When talking about fiscal policy, he used a rhetorical question. "Is there still room for a positive fiscal policy?"
Although Li Keqiang did not directly say "Yes", it is not difficult to get the answer "Yes" from his subsequent discourse.
There are examples to prove. In the first example, Li Keqiang once again stressed that by revitalizing the stock of financial funds, he is very humorous and said, "Many funds are still snoring there."
In the second example, Li Keqiang mentioned that the government's fiscal deficit rate and debt ratio are not high in the world. "The deficit rate this year is 2.3%, up to 2.4%, and the EU's fiscal deficit rate is ideally 3%. We still have a lot of room from 3%."
In terms of debt ratio, China is 56%, the United States is 100%, and Japan is 250%. Moreover, Li Keqiang also stated that "in China's debt structure, the central debt ratio is only 18%, the proportion of local debt is high, but the situation is controllable, and more than 70% of local debt has a return mechanism."
The relevant department is also reflecting. Zhu Guangyao, deputy finance minister, said at the forum last Friday that "the current global economy is facing the most severe and complicated situation since 2009. From the lessons of the financial crisis, it is necessary to consider whether traditional economic theory should be adjusted. 3 Whether the red line of the deficit rate and the red line of the 60% debt ratio can be reconsidered." This statement was interpreted by the analyst as financial or has further expansion.
Example 3: In the first three quarters of this year, the national general public budget expenditure was about 12 trillion yuan, with the same caliber increasing by 15.1%, which was 2.7 percentage points faster than last year. However, Li Keqiang firmly stated in his open class that "the intensity must be increased."
When talking about monetary policy, Li Keqiang clearly pointed out that "we will continue to adopt policy tools such as interest rate cuts and RRR cuts, especially for small and micro enterprises. In addition, other measures will be taken, such as medium and long-term loans."
It is worth mentioning that Li Keqiang was an open class taught at the Central Party School on the morning of October 23. At the 7 o'clock that evening, the central bank [microblogging] announced the "double down".
However, analysts believe that the rate cuts will not be ruled out during the year, especially considering that the probability of a rate hike by the Fed has increased significantly in December, and the subsequent central banks still need to loosely hedge the impact of the decline in foreign exchange holdings.
"Double engine": the potential for effective investment is large, and "double innovation" continues
In the future, China's economic growth will depend on “double enginesâ€. On the one hand, it will transform and upgrade traditional engines, increase the supply of public goods and public services; on the other hand, foster new engines, promote mass entrepreneurship, and innovate.
Li Keqiang continued to emphasize the "dual engine" of the economy in the open class.
In response to traditional engines, he pointed out that the potential for effective investment remains high. For example, there is still a large demand for space in infrastructure investment, shantytown renovation, urban underground pipe corridors, and rural hydropower in the central and western regions.
In terms of building a new engine, he said that in order to continue the "double innovation" activities, there must be a "water release and fish farming" idea to make more people rich.
Although the economy is slowing down, employment continues to rise. Every day, 12,000 new market players are born, which drives employment of 5-7 people on average. In the first nine months of this year, the 10 million new employment target was completed ahead of schedule, benefiting from “double creationâ€.
In addition, Li Keqiang also pointed out that it is necessary to comprehensively deepen reforms, continue to promote decentralization, integrate management, optimize services, and promote reforms in key areas such as finance, taxation, finance, and state-owned enterprises, and remove institutional and institutional obstacles that restrict development.
Li Keqiang's economic open class: China's economic growth depends on dual engines in the future
Abstract Lidong is suitable for tonic. Just this weekend, while everyone was eating and drinking, they also “tweeted†one of the most authoritative courses on the Chinese economy. The lecturer was Li Keqiang, the Premier of the State Council with a doctorate in economics. 11...
Lidong is suitable for tonic. Just this weekend, while everyone was eating and drinking, they also “tweeted†one of the most authoritative courses on the Chinese economy. The lecturer was Li Keqiang, the Premier of the State Council with a doctorate in economics.