Course**:
Waiting for the end of the year – China's economic outlook in 2024 (click here to view the replay of the completed course).
Speaker: Xie Yunliang, Chief Macro Analyst of Cinda**.
Course Introduction: The first low and then the high, the pillow and the waiting" summarize our views on the economy and the market in 2024, "the first low and the high" is the judgment of the pace of economic growth, the low point appears in the first quarter, the high point may appear in the fourth quarter, and what we need to do now is to quietly wait for the dawn to come.
* The Economic Work Conference pointed out that the difficulties and challenges faced by the current economy are mainly insufficient effective demand, overcapacity in some industries, weak social expectations, and still many risks and hidden dangers. As of November 2023, the growth rate is not satisfactory, and the bull's nose of insufficient demand should be said to be real estate, sales and investment are deeply negative. For some industries with overcapacity, the industrial industry can be divided into four categories: mining, raw material processing industry, equipment manufacturing industry, and high-tech manufacturing industry in the order of upstream and downstream. Social expectations can be seen separately at two groups, private entrepreneur expectations and consumer expectations, both of which are weak. It is estimated that at the end of 2022, the ratio of implicit and explicit debt scale will be about 1:1, and the real estate risk is concentrated in the decline in housing prices, and more risks such as sales downturn, investment downturn, and industrial chain downturn are also derived.
In response to these problems, it is clearly proposed that in 2024, it is necessary to consolidate and enhance the upward trend of economic recovery, so as to promote stability, first establish and then break. The average quarter-on-quarter GDP growth rate in 2024 is now 1.2% higher than that in 202325% is a bit higher, if it is raised to 135%, it can be deduced that the annual rate of the performance is about 55%, which actually requires a certain policy force to achieve, and it is expected that the GDP growth rate for the whole year of 2024 may be 4GDP growth may drop to about 4% in the first quarter, and gradually increase in the following quarters, and by the fourth quarter of 2024, GDP growth may reach more than 5%.
Combined with the statement of "active fiscal policy should be moderately strengthened" put forward by the ** Economic Work Conference, the financial support in 2024 will remain at a level that is not reduced compared with 2023, and the monetary policy will continue to be loose, because the ** Economic Work Conference clearly mentioned that the ** level of the expected target is still far from previous years. There may be two RRR cuts, 25bp each time, and there may be two interest rate cuts, 10bp each time, but the rate cut may also need to consider the rhythm of time, and it will be more likely after February.
The first one isManufacturing investmentThe logic is the repair of the double cycle of the manufacturing inventory cycle and the capacity cycle, and the two cycles have a nested relationship with each other. For the inventory cycle, the consensus is that the bottom has been basically achieved, and a round of replenishment may be ushered in in 2024, even if the strength and slope of the replenishment may be weak, it will also bring some boost to manufacturing investment. The capacity cycle is a larger cycle than the inventory cycle, a complete capacity cycle is about 7 to 8 years, and the most recent bottom of the capacity cycle appeared in the second quarter of 2023, and the third quarter of 2023 has seen a rebound in industrial capacity utilization, which indicates that 2024 may usher in a round of capacity cycle repair. At the same time, the manufacturing industry is the key direction of China's industrial policy support, so the growth rate of manufacturing investment in 2024 is likely to be slightly higher than that in 2023, possibly around 7%.
The second isExportsAt present, the inventory cycle of China and the United States has reached the bottom, and it may usher in a repair in 2024, and the replenishment of the United States will bring opportunities to our exports. Moreover, the inventory cycle is only one of the indicators of the global manufacturing industry, and more broadly, the global manufacturing industry will also bottom out in 2024, and marginal changes have been seen in many indicators, which is also conducive to China's exports. In addition, China's export share has risen steadily, so in the context of the recovery of the global manufacturing industry in 2024 and the expansion of the global export cake, compared with the negative growth in 2023, China's exports will usher in a repair in 2024, which is expected to be around 4%.
ForReal estateOur judgment is that the decline will be narrower, and it will actually improve from the perspective of marginal changes, but because it may still maintain a small negative growth, it may still pose some drag on the economy as a whole. The policy of real estate support on the sales side is still being introduced, and the decline in new starts on the investment side is actually significantly greater than that on the sales side, which has deviated from the equilibrium, and the new starts may usher in repair in 2024, which will boost real estate investment, and it is expected that the decline in real estate investment in 2024 may be around 3%, which will be significantly narrower than in 2023.
ForConsumption, 2024 may be worse than 2023, can be divided into two pieces **, the first is resident consumption, the most important influencing factors are employment, income and consumption tendency, the National Bureau of Statistics announced that the surveyed unemployment rate in urban areas in September to November 2023 for three consecutive months of 5%, flat with the pre-epidemic average, so far, employment has actually undergone a round of obvious repair, but not completely repaired to the pre-epidemic 48% of the state. As the epidemic subsides and prevention and control measures are optimized, residents' consumption propensity in the third quarter of 2023 has exceeded the level of the same period before the epidemic, which may be related to the fact that residents do not buy houses, and other consumption space has been released. However, residents' income has not yet been restored, and so far it is significantly lower than before the epidemic, so income is currently the most important factor restricting residents' consumption.
In addition, there is also a very important content is social group consumption, in the three years of the epidemic, the growth rate of social group consumption continued to be lower than that of resident consumption, as the epidemic subsides, it should see both repaired at the same time, the first quarter of 2023 did see the convergence of their growth rate difference, but from the second quarter, social group consumption showed a weaker trend than resident consumption, and turned downward in the third quarter, we believe that this reflects the impact of local financial constraints on social group consumption, and the root cause is the same as the local ** Based on these logics, as the local financial tension is difficult to reverse in the short term, social group consumption may still show a relatively sluggish situation in 2024, and the drag on overall consumption may continue. Therefore, compared to 7. in 20235%, the growth rate of real total consumption in 2024 may be marginally downward, at 59% or so.
One last lookInfrastructureThere may be some uncertainty in this variable, both positive and negative. The positive factor is the additional issuance of 1 trillion national bonds, and it is expected that an additional 1 trillion special treasury bonds will be issued in 2024, but at the same time, it is also bearish, including the tight financial resources of the places just mentioned, and the local ** expenditure on infrastructure investment may be reduced. If the fiscal force is moderate or moderate, infrastructure investment may fall slightly to about 7% in 2024, and if the policy is strengthened, the growth rate of infrastructure investment may also be higher.
First of all, look at CPI and PPI, which are currently negative growth, this round of weakening cannot be explained by structural factors, several more important structural factors, such as pork**, performance are relatively weak, and the trend of core CPI and service CPI is also weak, so it is systematically lower, which is related to the weakening of social group consumption, if the downward trend of social group consumption can not be reversed, the momentum of CPI and PPI to rise in 2024 is insufficient, So there will be no risk of high inflation in 2024. For the whole year, our CPI in 2024 is about 11. The PPI is 0 for the whole year7。
Looking at social finance, this factor has recently seen a relatively large change in market expectations, some time ago the central bank has repeatedly talked about revitalizing the stock of credit funds, the market is generally worried about whether the growth rate of social finance will decline in 2024, and recently the central bank has said that it will promote the rapid growth of social financing, and everyone has raised their expectations for the growth rate of social finance. In this regard, we have established a three-factor model, which is expected to increase the scale of new social finance in 2024 to 37 trillion yuan, and the growth rate of social finance stock will be flat at 98%, not lower than in 2023.
The performance of the capital market actually corresponds to the performance of the economy, and we believe that the pace of economic growth in 2024 will be low and high, and the capital market may gradually improve. As the first quarter of 2024 may be the low point of economic growth for the whole year, the market may still be relatively sluggish in the short term, and with the gradual development of policies, the effect of stable growth policies in the second half of the year may be better played. From a structural point of view, the first half of the year is mainly optimistic about structural opportunities, and the second half of the year may have better pro-cyclical performance.