On October 31st, the National Bureau of Statistics of China announced that the Comprehensive Purchasing Managers' Index (PMI) for October fell to 50.7 from 52.0 in September, and the Manufacturing Purchasing Managers' Index dropped even further to 49.5, marking the sixth month of this year when it fell below the 50 mark. Although a survey conducted by another commercial institution showed that the service industry procurement manager index rose to 50.4 in October, exceeding industry expectations, expert analysis suggests that this was only due to the "Golden Week of the 11th" and did not reflect the overall economic reality.
Caixin Network and S&P Global Inc. released their purchasing managers' index for October, pointing out that the service industry purchasing managers' index slightly increased from 50.2 to 50.4 in October, marking the second consecutive increase since July this year. However, this data is still the penultimate so far this year. The day before yesterday, Jiang Hao, the deputy director of the Economic Research Institute, said frankly that last month's purchasing managers' index of the service industry recovered only because this year's National Day Golden Week was linked to the Mid-Autumn Festival.
He told VOA: "For Chinese people, Mid-Autumn Festival is the most important festival besides the Spring Festival, and this year is linked with the National Day Golden Week, forming an additive effect, which is bound to stimulate the service industry. But it is impossible that every day is Mid-Autumn Festival, and people will not be able to travel every day, so it will not help the economy in the long run."
With the COVID-19 coming to an end at the beginning of 2023, the service industry purchasing managers' index at the beginning of this year has increased significantly, from 48 to 52.9 in January this year, to a new high of 57.8 in March this year. However, the trend of decline began in April, and although it rebounded to 57.1 in May, it dropped significantly to 53.9 in June. So on July 31 of this year, the State Council of China released the "Measures for Restoring and Expanding Consumption", introducing 20 measures to stimulate public consumption, including "optimizing the management of car purchase and use", "improving the consumption of home decoration and electronic products", "expanding the consumption of catering services", "enriching cultural and tourism consumption", "promoting cultural and sports exhibition consumption", "promoting green products to the countryside", "expanding digital consumption" Continuously improving the quality of consumer services and improving the long-term mechanism for promoting consumption. Unfortunately, the reality is that under these empty words, the purchasing managers' index of the service industry in August actually fell from 54.1 to 51.8, and then dropped to 50.2 in September, which is a new low of this year. It was not until October that it recovered due to the promotion of the Golden Week of the 11th.
For the inability to promote public consumption, the independent financial scholar Commander residing in Australia believes that the fundamental reason is that China's medical and other aspects of social security are not doing well, which makes people afraid to take out bank deposits for consumption. He told VOA, "If people have been worried about not being able to see their illness, and the demand for medical care increases, they dare not spend money to spend. So they will only spend money to satisfy their appetite and meet their daily needs. These are very small amounts of consumption, which is difficult to drive China's economic growth
Unstable economic prospects cause people to be hesitant to consume
It is just that Chinese people are accustomed to storing money in banks as a means of self-protection in the absence of social security, which has been a traditional problem in China in times of crisis. Why are many Chinese people willing to spend a lot of money on high-value consumption more than a decade ago, but have decreased in recent years
The day before yesterday, Jiang Hao, Deputy Director of the Institute of Economic Research, stated that the main reason why Chinese people are not optimistic about the future is now. He said, "In the era of reform and opening up, the economy was getting better year by year because everyone was making money, so everyone was willing to spend money. But now the economy is not good, so naturally they dare not spend money recklessly because they are uncertain whether they can make money again next year after spending money. Who even knows if the company I work for is still here next year?" Jiang Haoxu said that he and his friends are not very optimistic about the economic development next year, No one can guarantee how much money they will make next year, so they should be conservative in spending money.
Facing economic recession is a fact that almost all Chinese people know and agree with. The National Bureau of Statistics of China announced last month that the GDP in the third quarter increased by 4.9% year-on-year, significantly slowing down from 6.3% in the second quarter. Moreover, the real estate sector, on which the Chinese economy has relied the most in recent years, according to the latest data from the National Bureau of Statistics, the total investment in real estate development nationwide decreased by 9.1% annually from January to September this year. With the signs of the Sino US trade war not ending, the situation of foreign investment decreasing or even withdrawing from China has not changed. As a result, the youth unemployment rate in China reached an all-time high of 21.3% in August, prompting the Chinese government to adopt the ostrich policy and announce that the relevant figures will no longer be released. Therefore, it can be expected that the situation of youth unemployment in China will not only be difficult to improve in the near future, but may even become more severe.
The PMI of the service industry can still rely on major festivals, such as the Mid-Autumn Festival, the National Day Golden Week, the Spring Festival and the May Day holiday to usher in the Little Spring Festival, but the PMI of the manufacturing industry has no incentive in this regard.
The National Bureau of Statistics of China explained that the manufacturing purchasing managers' index fell below the 50 mark again in October due to factors such as the "11th" holiday vacation and early release of pre holiday demand, especially the high base in September and the decrease in working days in October. The official is still optimistic about the outlook.
National progress and civilian retreat make it difficult to promote the economy
However, Jiang Hao believes that the main reason for the difficulty in improving the Chinese economy is that China's economic policies have followed the old path of "advancing the country and retreating the people", with resources biased towards state-owned enterprises. However, state-owned enterprises lack efficiency due to their monopoly of resources, unable to fully utilize their ability to match resources, resulting in resource waste. The commander also agrees that the Chinese government has intervened too much in the market economy, making it impossible to drive market development. He said, "The government still wants to stimulate the production activities of industrial producers using the old method of slow irrigation with large amounts of water. This can only have a short-term effect, and they are only wasting taxpayers' money recklessly or repeating low-level construction. If there is no market demand to drive sales, products still cannot be sold. Relying solely on state-owned enterprises' unified sales and purchase, as well as monopolistic price reduction, will not work in the long run
Another factor that causes China's economy to face difficulties is that the Chinese government is increasingly strict in its management of the people. In particular, the "dynamic zeroing" adopted during the COVID-19 and the sudden changes in epidemic prevention policies have made the people more uneasy and directly affected their desire for consumption and investment.
Yue Ge, an independent commentator living in New Zealand and the person in charge of the oil pipeline channel "Yue Ge Nanlang", said that the "dynamic reset" policy has caused the "COVID-19 scar" effect on the public. He told VOA: When the West had already cancelled epidemic prevention last summer, China continued to strictly control the epidemic at the end of the year, which caused trauma to the people. The Chinese government said "seal it off" and "control it", for example, in the catering industry, they were suddenly not allowed to operate, and investment was said to be tens of thousands or even one million yuan. They suddenly lost their money. So now, the people will be cautious in both consumption and investment, because they are not Know when there will be a change again
On the other hand, the Chinese government, in order to further control its power, also closely monitors the details of people's livelihood. For example, five departments including the Beijing Public Security Bureau issued a notice in July 2021 on strengthening the management of illegal electric three or four wheeled vehicles, stipulating that from January 1 next year, illegal electric three or four wheeled vehicles shall not be allowed to drive on the road or park in public places such as roads, squares, and parking lots. What exactly is a "violation" is not explicitly stated in the relevant notice. So Jiang Hao reluctantly said, "Tricycles are the daily needs of the people, but now they are being managed so harshly. This will only make the people afraid to spend money, because they need to be prepared for various uncertain factors in the future, and even turbulence