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On July 31， 2018， the Politi- cal Bureau of the Communist Party of China （CPC） Central Committee held a conference to analyze China’s current economic situation. The conference also emphasized that work must be done to stabilize employment， finance， foreign trade， foreign capital， investment and expectations. How is China’s current economic situation looking？ Why did the CPC Central Committee introduce the “six stabilities？”
Challenges for China’s Real Economy
According to figures released by China’s National Bureau of Statistics on July 16， the country’s GDP expanded by 6.8 percent year-on-year in the first half of 2018， down by 0.1 percentage point from the same period last year. Growth rates of both investment and consumption endured significant decreases.
In terms of prices， although price growth rate is not high， the upward pressure on pricing is becoming increasingly evident. China’s consumer price index （CPI）， a key gauge of inflation， demands special attention. In July， CPI grew 2.1 percent year-on-year， up by 0.2 percentage point from June. The growth rate of consumer prices has witnessed a modest increase. Analysts believe there is a possibility that prices will continue to go up in the second half of the year.
China’s producer price index（PPI）， which measures the costs for goods at the factory gate， has also risen. Pricing trends for consumer goods are closely related to CPI. Since April this year， the growth rates for the prices of consumer goods such as food and clothing have seen month-on-month rises.
Risk of Escalating Trade War
Trade friction between China， as an export-oriented economy， and the United States remains an important factor influencing China’s current economic situation. The escalated trade war directly affects people’s expectations for China’s future economic development， which in turn affects their immediate decisions on investments and consumption in China.
In terms of economics， China used to serve as the “world’s factory”in the international arena. It exported abundant commodities to the U.S. and Europe and enjoyed large trade surpluses. However， with Chinese export commodities placing greater importance on branding and containing higher technical content at present， China is moving towards the U.S. on the value chain at a high speed. Thus， a competitive relationship was formed between the two parties.
The Necessity of “Six Stabilities”
Considering both the international and domestic macroeconomic situations， the introduction of the“six stabilities” is tremendously important. The conference held by the Political Bureau of the CPC Central Committee pointed out that in the first half of 2018， growth rates for many economic gauges dropped， but not employment. However， according to the macroeconomic figures released by China’s National Bureau of Statistics on August 14， employment also witnessed a decline in July. Thus， it is important to stabilize employment and investment. Stabilizing foreign trade and foreign capital is a long-term economic issue. This situation is dictated by China’s developmental stage， and the total global demand is not a figure that can expand easily. In the future， competition will become even more intense.
Since the beginning of 2018， China’s financial risk has mounted， making it harder for freed-up funds to flow into the real economy. In general， stabilities in employment， finance， foreign trade， foreign capital， and investment are complementary to each other.
Now， China needs steadily growing foreign trade， and its reform and opening up should be driven to a deeper level to meet the ever-growing consumption upgrade. Besides， stable foreign investments are highly significant to China’s currency exchange rate， foreign trade and international image.
During this period， when China’s economy is facing great downward pressure， stable policies and solid economic development provide guarantees and enhance enterprises’expectations for the future.
Challenges for China’s Real Economy
According to figures released by China’s National Bureau of Statistics on July 16， the country’s GDP expanded by 6.8 percent year-on-year in the first half of 2018， down by 0.1 percentage point from the same period last year. Growth rates of both investment and consumption endured significant decreases.
In terms of prices， although price growth rate is not high， the upward pressure on pricing is becoming increasingly evident. China’s consumer price index （CPI）， a key gauge of inflation， demands special attention. In July， CPI grew 2.1 percent year-on-year， up by 0.2 percentage point from June. The growth rate of consumer prices has witnessed a modest increase. Analysts believe there is a possibility that prices will continue to go up in the second half of the year.
China’s producer price index（PPI）， which measures the costs for goods at the factory gate， has also risen. Pricing trends for consumer goods are closely related to CPI. Since April this year， the growth rates for the prices of consumer goods such as food and clothing have seen month-on-month rises.
Risk of Escalating Trade War
Trade friction between China， as an export-oriented economy， and the United States remains an important factor influencing China’s current economic situation. The escalated trade war directly affects people’s expectations for China’s future economic development， which in turn affects their immediate decisions on investments and consumption in China.
In terms of economics， China used to serve as the “world’s factory”in the international arena. It exported abundant commodities to the U.S. and Europe and enjoyed large trade surpluses. However， with Chinese export commodities placing greater importance on branding and containing higher technical content at present， China is moving towards the U.S. on the value chain at a high speed. Thus， a competitive relationship was formed between the two parties.
The Necessity of “Six Stabilities”
Considering both the international and domestic macroeconomic situations， the introduction of the“six stabilities” is tremendously important. The conference held by the Political Bureau of the CPC Central Committee pointed out that in the first half of 2018， growth rates for many economic gauges dropped， but not employment. However， according to the macroeconomic figures released by China’s National Bureau of Statistics on August 14， employment also witnessed a decline in July. Thus， it is important to stabilize employment and investment. Stabilizing foreign trade and foreign capital is a long-term economic issue. This situation is dictated by China’s developmental stage， and the total global demand is not a figure that can expand easily. In the future， competition will become even more intense.
Since the beginning of 2018， China’s financial risk has mounted， making it harder for freed-up funds to flow into the real economy. In general， stabilities in employment， finance， foreign trade， foreign capital， and investment are complementary to each other.
Now， China needs steadily growing foreign trade， and its reform and opening up should be driven to a deeper level to meet the ever-growing consumption upgrade. Besides， stable foreign investments are highly significant to China’s currency exchange rate， foreign trade and international image.
During this period， when China’s economy is facing great downward pressure， stable policies and solid economic development provide guarantees and enhance enterprises’expectations for the future.