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Reform expected to unleash new driving forces

Author  :  XIAO HAOCHEN     Source  :    Chinese Social Sciences Today     2017-09-04

The Chinese economy maintained its momentum in July, according to a report published by China Minsheng Academy on Aug. 16.

The report also analyzed the recent global economic situation. It predicts a strong global economy in the near future. The principal contradiction developed countries will face when formulating monetary policy is the coexistence of rising employment with insufficient inflation in the long term, according to the report.

Global recovery will not be without setbacks, according to the report. Recovery in the United States has been relatively weak. It is estimated that the United States will shrink its balance sheet in September, but the rise in interest rates will slow in December.

The report expresses doubts about whether the European recovery will remain strong, and suggests quantitative easing in the short term. Japan has performed badly according to several major economic indicators and may repeatedly postpone realizing the inflation target. Recovery in emerging economies tends to slow as major countries cut interest rates in quick succession.

The report analyzes highlights in the Chinese economy in July. Medium and long-term loans of enterprises increased year on year. Growth in social financing exceeded expectations, indicating strong demand in the real economy.

Overall, inflation is moderate but there is high core inflation, which excludes certain commodities with volatile prices—notably food and energy. The Producer Price Index stopped falling. The Service Production Index showed steady growth, and investment in the service sector increased, according to the report.

To further promote a steady domestic economy, Huang Jianhui, head of the academy, suggested unleashing new driving forces through reform, opening up and innovation. It is necessary to strengthen management of local debts while deepening financial reform to better serve the real economy, he said. In addition, he suggested implementing prudent monetary policies as well as strong fiscal policies—cutting taxes, introducing special bonds for local governments, and promoting cooperation between government and social capital.

Editor: Yu Hui

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